News and Research on China Petroleum & Chemical Corp. (SNP)
Business Description
China Petroleum & Chemical Corporation, an energy and chemical company, through its subsidiaries, engages in the integrated oil and gas and chemical operations in the People's Republic of China (the PRC). Oil and gas operations consist of exploring for, developing and producing crude oil and natural gas; transporting crude oil, natural gas and products by pipelines; refining crude oil into finished petroleum products; and marketing crude oil, natural gas and refined petroleum products. Chemical operations include the manufacture and marketing of a range of chemicals for industrial uses.
Segments
The company operates in four principal business segments: Exploration and Production Segment, Refining Segment, Marketing and Distribution Segment, and Chemicals Segment.
Exploration and Production Segment consists of the company’s activities related to exploring for and developing, producing and selling crude oil and natural gas.
Refining Segment consists of purchasing crude oil from the company’s exploration and production segment and from third parties, processing of crude oil into refined petroleum products, selling refined petroleum products principally to its marketing and distribution segment.
Marketing and Distribution Segment consists of purchasing refined petroleum products from the Company’s refining segment and third parties, and marketing, selling and distributing refined petroleum products by wholesale to customers and independent distributors and retail through its retail network.
Chemicals Segment consists of purchasing chemical feedstock principally from the refining segment and producing, marketing, selling and distributing chemical products.
EXPLORATION AND PRODUCTION
The company explores for, develops and produces crude oil and natural gas in a range of areas across China. As of December 31, 2006, it held 207 production licenses with terms ranging from 7 to 55 years. As of December 31, 2006, it held 357 exploration licenses for various blocks in which it engaged in exploration activities.
Properties
The company operates 16 oil and gas producing fields, each of which consists of oil and gas producing blocks which are located in China.
Shengli oilfield is the company’s primary producing oil field in China. It consists of 69 producing blocks of various sizes extending over an area of 61,000 square kilometers in northern Shandong province. The blocks are located in the Jiyang trough with various oil producing levels. In 2006, Shengli field produced 195 million barrels of crude oil and 28.28 billion cubic feet of natural gas, with an average daily production of 546 thousand barrels-of-oil.
The company’s estimated proved reserves of crude oil and natural gas as of December 31, 2006 were 3,771 million barrels-of-oil equivalent (including 3,293 million barrels of crude oil and 2,856 billion cubic feet of natural gas). In 2006, it produced an average of 898 thousand barrels-of-oil equivalent per day.
REFINING
The company processed approximately 146.3 million tonnes of crude oil in 2006. The company produces a range of refined petroleum products. Its principal refined petroleum products include Gasoline; Diesel; Kerosene including jet fuel; solvent, asphalt, petroleum coke,Paraffin; Light chemical feedstock; Lubricant; Liquefied petroleum gas; and Fuel oil. Gasoline and diesel are sold through its marketing and distribution segment through both wholesale and retail channels. The company operates 27 refineries in China. As of December 31, 2006, its consolidated primary distillation capacity was 176.1 million tonnes per annum. As of December 31, 2006, its crude oil suppliers included PetroChina Company, Ltd. (PetroChina) and CNOOC, Ltd. (CNOOC).
MARKETING AND SALES OF REFINED PETROLEUM PRODUCTS
The Company operates the sales and distribution system for refined petroleum products in China. In 2005, it distributed and sold in China approximately 111.7 million tonnes of gasoline, diesel and kerosene including jet fuel.
Retail: The company's retail sales are made through a network of service stations and petroleum shops which operate under the Sinopec brand. In 2006, it sold approximately 72.2 million tonnes of refined petroleum products through its retail network. As of December 31, 2006, its retail network consists of 28,001 service stations that are wholly-owned and operated by it or jointly-owned and operated or leased by it and 800 franchised service stations that are owned and operated by third parties.
Direct Sales: In 2006, the company sold approximately 19.0 million tonnes of refined petroleum products, including 2.9 million tonnes of gasoline, 15.9 million tonnes of diesel and 0.2 million tonnes of kerosene, through direct sales to those commercial customers such as industrial enterprises, hotels, restaurants and agricultural producers.
Wholesale: In 2006, it sold approximately 20.6 million tonnes of refined petroleum products through wholesale channels. Its wholesale sales include sales to large commercial or industrial customers and independent distributors as well as sales to certain long-term customers such as railway, airlines, shipping and public utilities. Through its wholesale centers, the company operates 454 storage facilities with a total capacity of approximately 12.6 million cubic meters, substantially all of which are wholly-owned by it. Its wholesale centers are connected to its refineries by railway, waterway and, in some cases, by pipelines. It also own railways, oil wharfs, oil barges, rail tankers and oil trucks.
CHEMICALS
The company operates as a petrochemical producer in China. It produces a range of petrochemical products, including intermediate petrochemicals, synthetic resins, synthetic fiber monomers and polymers, synthetic fibers, synthetic rubber and chemical fertilizers. Synthetic resins, synthetic fibers, synthetic rubber, chemical fertilizers and some intermediate petrochemicals comprise a majority of its external sales. Synthetic fiber monomers and polymers and intermediate petrochemicals, on the other hand, are internally consumed as feedstock for the production of other chemical products. Its chemical operations are integrated with its refining businesses, which supply a portion of its chemical feedstock such as naphtha.
Products
Intermediate Petrochemicals
The company produces ethylene in China. Its rated ethylene capacity was 6.15 million tonnes per annum as of December 31, 2006. In 2006, it produced 6.16 million tonnes of ethylene.
The company produces aromatics in the forms of benzene and para-xylene, which are used primarily as feedstock for purified terephthalic acid, or PTA, the preferred raw material for polyester.
Organic chemicals extracted from olefins and aromatics are also intermediate petrochemicals and are essential raw materials for synthetic resins, synthetic rubber and synthetic fibers. It also produces butanol, styrene, paraxylene, vinyl acetate, phenol and acetone in China.
Synthetic Resins
The company produces polyethylene, polypropylene and polystyrene in China.
Synthetic Fiber Monomers and Polymers
The company’s principal synthetic fiber monomers and polymers are purified teraphthalic acid, ethylene glycol, acrylonitrile, caprolactam, polyester, polyethylene glycol and polyamide fiber.
Synthetic Fibers
The company's principal synthetic fiber products are polyester fiber and acrylic fiber.
Synthetic Rubbers
The company’s principal synthetic rubbers are cis-polybutadiene rubber, styrene butadiene rubber, or SBR, styrene butadiene-styrene thermoplastic elastomer and isobutadiene isoprene rubber, or IIR.
Chemical Fertilizers
The company produces synthetic ammonia and urea. Its synthetic ammonia is used to manufacture urea, caprolactam and acrylic nitrile.
Marketing and Sales of Petrochemicals
The company's principal sales and distribution channels consist of direct sales to end-users, majority of which are large and medium size manufacturing enterprises, and sales to distributors in its national sales network. It also provided after-sale services to its customers, including technical support.
Significant Events
In May 2007, Indian Oil Corp. Ltd. announced that it has signed a memorandum of understanding with the company in the hydrocarbons and petrochemicals sector.
The company has entered into a joint venture with China Petroleum & Chemical Corp. to produce natural gas in Jilin province.
History
China Petroleum & Chemical Corporation was founded in 2000.
