PetroChina, CNOOC reports growth in revenues and net profit, Sinopec reports declines in Q1 2024.

Profit: In the first quarter of 2024, PetroChina (+10.9%, +4.7%) and CNOOC (+14.1%, +23.7%) recorded increases in both revenue and net profit, while Sinopec (-0 .17%, -9.7%) recorded declines. This is primarily because PetroChina and CNOOC are focusing more on oil and gas exploration and production (E&P). Increased natural gas production and sales and higher oil prices have boosted profits in these areas. On the other hand, Sinopec’s increased focus on downstream refining, petrochemicals and marketing, coupled with a weak recovery in demand for petroleum products, has hampered its profitability recovery.

Investment: Driven by goals of achieving maximum carbon dioxide emissions and neutrality, China’s national oil companies (NOCs) have slowed investments in refining, petrochemicals and marketing of petroleum products, while accelerating their ventures into new energy and low-carbon transition businesses, especially in the electric vehicle sector charging sector. In 2023, the total number of PetroChina and Sinopec battery charging and swapping stations increased by approximately 122% and 183% y/y, respectively. This rapid growth trend is expected to continue in 2024.

E&P: Rising oil prices have boosted profits for the mining sector. In the first quarter of 2024, international oil prices increased by 2.4% compared to the first quarter of 2023, leading to a 4.8% increase in PetroChina’s earnings and an 11% increase in Sinopec’s E&P business. Although PetroChina’s greater scale of oil and gas exploration and production led to higher absolute earnings growth, its growth rate was lower than that of Sinopec.

Refining: Refinery profit margins declined as crude oil costs rose in the upstream market and demand for refined products weakened compared to year-ago levels. As a result, profits from PetroChina’s and Sinopec’s refining operations dropped sharply, by 25.8% and 34.2% y/y, respectively. Sinopec, which has a larger refining business, felt a more significant impact.

Chemicals: The profitability of both PetroChina and Sinopec chemical segments improved, showing year-on-year growth of 223.7% and 46.8%, respectively. However, overall demand in the chemical market remained subdued, causing chemical product prices to lag the rise in crude oil prices. Despite the larger scale of its operations, Sinopec still had difficulty making a profit in this segment.

Marketing: PetroChina’s marketing segment profits decreased by 17.1% y/y, while Sinopec’s profits increased by 2.4%. Sinopec’s growth was mainly boosted by first-quarter non-oil earnings growth of 5.8% year-on-year.

Accelerating your EV charging business: Driven by the goals of achieving maximum carbon emissions and carbon neutrality, China’s state-owned oil companies have accelerated investments in energy start-ups and transitions to low-carbon technologies, with a particular focus on the electric vehicle charging infrastructure sector.

By March 2024, Sinopec has built more than 6,500 electric vehicle charging and battery swapping stations with a total of 51,000 charging terminals, mainly superchargers and fast chargers. Meanwhile, PetroChina has established over 900 battery charging and swapping stations, and plans to build over 1,000 additional stations by 2025.

Since early 2024, Sinopec has formed a joint venture with Wanbang Digital Energy Co., China’s second-largest charging stack company, and expanded its strategic partnership with BP to strengthen cooperation in the electric vehicle charging sector.

In September 2023, PetroChina acquired Podevio New Energy Co., a central government-owned pioneer in China’s electric vehicle charging sector that operates 25,000 public charging stations and approximately 2,300 charging stations.

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Edited by Aggie Hu, [email protected]