China Petroleum & Chemical Corporation
2001 Interim Results Announcement
August 28, 2001
Hong Kong
Agenda
 Market Overview and Summary of Results
 Review of Operations
 Review of Financial Performance
 2H2001 Outlook
2
Market Overview and Summary of Results
Market Overview
 Consistent growth in Chinese Economy
 Domestic consumption of refined products increased by
3.59%
 Robust growth in domestic chemicals demand, Chemicals
consumption(ethylene equivalent) increased by 7.2%
 Relatively high crude oil price
 Asian refining margins remain low
 Chemicals price under pressure globally
4
Summary of Operations
1H 2000
1H 2001
Change
Oil & gas production (MM boe)
129.69
130.62
0.72%
Crude oil processed (10,000 bbl/day)
209.40
210.90
0.72%
80.0
80.4
0.4
3,248
3,367
3.66%
980
1,423
45.20%
107.8
114.6
6.31%
Utilization rate of refineries (%)
Gross sales of refined oil (10,000 MT)
Including: Retail (10,000 MT)
Ethylene production (10,000 MT)
Note: Crude oil and natural gas production do not include production from National Star
5
Summary of Financial Performance
1H 2000
1H 2001
Change
Operating Revenues
149,367
164,307
10.0%
Operating Expenses
134,748
148,448
10.17%
EBIT
14,619
15,859
8.5%
EBITDA
24,228
25,896
6.9%
7,513
9,580
27.5%
(RMB MM)
Net Profit
6
Review of Operations
E&P
Production of crude oil (MMbbls)
1H 2000
1H 2001
Change
122.92
123.23
0.25%
40.6
44.4
9.36%
136.0
142.6
4.85%
3.52
3.33
-0.19
Production of natural gas (bcf)
New proved crude reserves (MMbbls)
Consolidated lapse rate (%)
Note: Crude oil and natural gas production exclude production from National Star
8
Refining
1H 2000
1H 2001
Change
209.40
210.90
0.72%
28.35
39.67
39.93%
Capacity utilization (%)
80.0
80.4
0.4
Yield for light stream (%)
70.1
70.58
0.48
91.99
91.70
-0.29
2.63
3.67
1.04
Crude oil processed (10,000 bbl/day)
Including: Sour crude processed
(10,000 bbl/day)
Refining yield (%)
Refining margins (US$/bbl)
9
Marketing – Expanding Retail
Network
1H 2000
1H 2001
Change
(10,000 MT)
Gross sales of refined products
- Retail
Retail market share in principal market
- Distribution
- Wholesale
Total Amount of gas stations
- Owned or operated
- Franchised
3,248
3,367
3.66%
980
1,423
45.2%
56%
66%
10 pnt.
N/A
548
N/A
2,268
1,396
-38.45%
20,527
27,749
35.2%
17,537
23,565
34.4%
2,990
4,184
39.9%
10
Chemicals - Responding to Market
1H 2000
(10,000 MT)
1H 2001
Change
Price D
Ethylene production
107.83
114.60
6.3%
N/A
Synthetic resin
146.01
167.77
14.9%
-2%
15.06
20.07
33.3%
5%
193.72
184.35
-4.8%
-11%
52.45
49.31
-6.0%
-7%
Synthetic rubber
Synthetic monomers & polymers
Synthetic fiber
Performance Synthetic Resin (10,000 MT)
68.1
61.5
1H2000
1H2001
Differential Fiber (10,000 MT)
15.8
16.3
1H2000
1H2001
11
Cost Reduction & Efficiency
Improvement
Million RMB
E&P
Refining
Marketing
Chemical
Total
Cost cutting 2001E
450
640
610
490
2190
1H 2001 actual
190
385
285
522
1382
2000
1H 2000
1H 2001
Reduce
Crude oil lifting cost (US$/bbl)
6.63
7.26
6.63
0.63
Refining cash operating cost (US$/bbl)
2.14
2.26
2.07
0.19
Marketing cash operating cost (RMB/ton)
181
174
166
8.0
183.2
-
159.8
23.4*
Ethylene cash operating cost (US$/ton)
* : Change in Ethylene cash operating cost compared with FY2000 figure
12
Capital Discipline
2001 Capex Plan
1H2001 Actual Capex
(RMB MM)
Oil Field
31%
Refining
17%
Marketing
26%
Chemicals
26%
E&P
5,600
Refining
2,800
Marketing
7,900
Chemicals
4,200
Others
RMB 40.76 billion
Total
200
20,700
13
Successful A Share Offering
 On August 8, 2001, Sinopec commenced trading in the
Shanghai Stock Exchange
• Size: 2,800,000,000 shares
• Offering Price: RMB 4.22 per share
Fund raised:
RMB 11.816 Bn
 Use of Proceeds：
• Acquire National Star to strengthen upstream operations
• Invest in Southwest refined products pipeline and NingboShanghai-Nanjing crude oil pipeline to reduce logistics
costs and expand market share
14
Review of Financial Performance
Earnings Continue to Grow
1H 2000
1H 2001
Change
(RMB MM)
Revenue and other operating income
149,367
164,307
10.0%
EBITDA
24,228
25,896
6.9%
EBIT
14,619
15,859
8.5%
7,513
9,580
27.5%
0.11
0.11
0.0%
Net Profit
EPS
16
Stable Cash Flow
(RMBMM )
Net cashflow from operating activities
1H '00
1H '01
Change
10,509
6,612
-3,897
-14,620
-12,286
2,334
Net cashflow from financing activities
8,366
14,899
6,533
Cash & cash equivalents – net change
4,255
9,225
4,970
2000-12-31
2001-6-30
41,134
39,959
Net cashflow from investment activities
Cash, cash equivalents and time deposit
Change
-1,175
Note: Before proceeds from A-share listing
17
Healthy Balance Sheet
1H 2000
(RMB MM)
Total Assets
1H 2001
Change
347,409
373,786
26,377
91,777
106,662
14,885
Total Capitalization
280,191
298,006
17,815
Debt to equity ratio
32.75%
35.78%
3 pnt.
Total Debt
9.0
7.2
1H '00
1H '01
EBITDA/Interest Expense
18
Strength of Integration
Operating Profits
EBIT (RMB MM)
(RMB MM)
1H2000
1H2001
ROCE
%
18,000
353
186
16,000
14,000
42
1,938
12,000
1,584
3,750
10,000
8,000
11,570
6,000 11,055
E&P
11,055 11,570
Refining
-1,571
2,776
2.87
Marketing
3,155
974
1.96
Chemicals
1,938
186
0.20
42
353
-
14,619 15,859
4.44
4,000
Corporate & others
2,000
10.54
0
1H2000
E&P
Chemicals
1H2001
Refining and Marketing
Corporate & Others
Total
Note: ROCE = 1H ATOI / Total Capital Employed
19
2H 2001 Outlook
Market Environment - Analysis &
Comments
 Staggering global economy while stable growth in Chinese
economy
 Chinese government continues to improve market order
 Since May 2001, new gas stations can only be built by
either Sinopec or PetroChina
 The two Companies will coordinate to maintain market
equilibrium, and ensure stable oil price
 International crude oil price stays at relatively high level
 Low refining margin in Asian market, inverted prices in
Singapore from June to early August
 Chemical industry still in cycle low
21
E&P
 Increase crude oil production appropriately to take
advantage of the high oil price window
 Annual planned production of 267.7 MM bbl of crude oil
and 148.3 bcf of gas (incl. National Star), 8.2% and
85.8% increase respectively.
 Add RMB1.5 bn to E & P and explore replacement
resources
 Lower operating costs by applying new technologies
22
Acquisition of National Star
2001E Crude Oil Production
(bcf)
(MM bbl)
300
250
200
150
100
50
0
2001E Gas Production
246.37
267.67
200
148.30
150
100
98.2
50.1
50
21.30
0
National Star
Listco
National Star
Total
2001E Reserves
Total
2001E Lifting Cost
(mm boe)
(US$/boe)
5000
3168
4000
3934
8.00
6.54
6.25
Listco
Total
6.00
3000
2000
Listco
4.00
766
2.20
2.00
1000
0.00
0
National Star
Listco
Total
National Star
23
Refining
 Optimize production to meet market demand, annual
crude oil processing volume roughly remains 2000 level
 Optimize the material flow of the crude resources, reduce
the purchase cost and lower the crude inventory level.
 Further reduce the material and energy consumption.
Target annual refining yield at 92.3%, light yield at 71.6%,
and 2H 2001 diesel/gasoline ratio at 2.13
24
Marketing
 Enhance network infrastructure, expand the market share
 Increase retail and distribution volume. Projected annual sales
of 70 MM MT incl. 30 MM MT of retail and 10 MM MT of
distribution
 Lower inventory level to 5.5 MM MT at year end.
 Reduce cost
 Optimize resource allocation to reduce distribution cost
 Flatten managerial hierarchy to lower management and
administrative costs
 Regulate the market order
25
Chemicals
 Ensure high utilization of efficient production facilities, 2.2 MM
MT of ethylene production
 Yanhua Ethylene plants commence production in Oct.
 Enhance product quality, increase the ratio of high value added
products, percentage of performance compound at 45%,
differential fiber at 30%.
 Forge marketing, direct sales account for 58%. Develop B2B ecommerce and ensure the E-trading volume of RMB 15 bn
 Strengthen management to reduce cost and enhance
competitiveness. Reduce Ethylene cash operating cost to
USD155/tone
26
Conclusion
 Improving market order
 Promote rationalization in pricing mechanism
 Stable growth in oil & gas production
 Operating strategies in line with market conditions
 Reduce costs
 Increase sales volume
 Lower inventory level
Generate Attractive Return to Investors
27
For Further Information
http://www.Sinopec.com
Investor Relations
Tel: (8610) 64990060
Fax: (8610) 64990067
Email: ir@Sinopec.com
Media Inquiries
Tel: (8610) 64990064
Fax: (8610) 64990093
Email: media@Sinopec.com
28