- China’s 2030 carbon emissions peak action plan provides more opportunities than threats to Sinopec’s business.
- Secretary to the Board of Directors Huang Wensheng said during the company’s third quarter results briefing conference call Oct. 29.
A recently published news article in the Platts states that Sinopec sees more opportunities than threats in China’s emissions peak action plan.
China’s State Council
China’s State Council on Oct. 26 released the nation’s action plan to peak carbon emissions, including targets to have around 40% of incremental vehicles in the country fueled by new energy sources and reach peak petroleum consumption for land transportation by 2030.
Huang said the company expected China’s gasoline demand to peak in 2025 or 2026, with more and more electric vehicles to replace gasoline and gasoil cars.
Output of transportation fuels gasoline, gasoil and jet fuel accounted for more than 50% of Sinopec’s production and more than 30,000 oil product retail pump stations in China, which is a threat to the company when consumption peaks, Huang said.
Leveraging the retail network
However, the company has started to leverage the retail network to provide integrated energy supplies, with hydrogen refueling and battery service on top of petroleum fuels, to meet demand for energy transition, Huang said, adding that this was an opportunity.
Meanwhile, Sinopec has significantly lifted its capex in the chemical sector, aiming to increase petrochemical product yield while capping oil products output as consumption approaches peaking, Huang added.
Sinopec spent Yuan 29.7 billion in its chemical segment over January-September, surging 184% from Yuan 10.46 billion over the same period a year earlier, the company results showed.
Oil product yield down
The company’s yield of the key oil products gasoline, gasoil and jet fuel fell to 57% in the first nine months of the year from 60% a year earlier.
China also targets keeping domestic capacity for the primary refining of crude oil below 1 billion mt/year (20 million b/d) and raising the utilization rate of production capacity for main products to above 80% by 2025, according to the action plan.
Huang said there was still room for China’s refining capacity to grow, given that the current capacity is about 900 million mt/year and some small and independent capacities were set to be shut.
Sinopec, the world’s biggest refiner
Sinopec is the world’s biggest refiner, with 296.90 million mt/year refining capacity at end 2020.
The refiner and PetroChina slashed their gasoil yields over January-September, which led to a supply shortage in the domestic market when imports of gasoil blending material light cycle oil were impacted by a hefty consumption tax.
Sinopec’s gasoil yield fell to 23%
Sinopec’s gasoil yield fell to 23% over January-September from 27% in a year earlier, resulting in gasoil output dropping 10.3% to 42.92 million mt despite crude throughput rising 9.3% over the same period.
The company said it will increase gasoil supplies in Q4 to meet strong domestic demand by lifting throughput and production yields, Platts has reported.
It has already raised its gasoil supply by about 20% in October from the monthly average level in the first three quarters of the year, and aims to further boost supply in November by 29% month on month.
Gasoil production averaged 7.15 million mt/month over January-September, according to the company’s results.
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Source: Reuters
