China Petroleum & Chemical Corporation (Sinopec) - Company Profile 2010.pdf
China Petroleum refining; marketing and distribution; chemicals; and others. The exploration and production segment of Sinopec explores and develops oil fields, produces crude oil and natural gas, and sells products to the refining segment of the company and external customers. As of December 31, 2009, the company held 193 production licenses with an aggregate acreage of 19,136 square kilometers and 318 exploration licenses for various blocks in which the company is engaged in exploration activities. At the end of 2009, Sinopec had proved oil and gas reserves of 3,943 million barrels of oil equivalent (mmboe), including 2,820 million barrels (mmbbls) of proved reserve of crude oil, and 6,739 billion cubic feet (bcf) of proved reserve of natural gas. In FY2009, the company produced an average of 962 thousand barrels of oil equivalent (boe) per day, of which approximately 85.8% was crude oil and 14.2% was natural gas. Sinopecs refining business segment processes and purifies crude oil, which is sourced from the exploration and production segment of the company and external suppliers. It also manufactures and sells petroleum products to the chemicals and marketing and distribution segments of the company and external customers. Sinopec is the largest refiner of petroleum and oil producer in China, with its refining capacity ranking third in the world.The company's major oil products include gasoline, kerosene, diesel, lube oil, chemical light feedstock, fuel oil, solvent oil, petroleum wax, asphalt, petroleum coke, liquefied petroleum gas (LPG), propylene, and benzene products.The companys refineries are mainly located in China's southeast coastal area, middle, and lower reaches of Yangtze River and North China. At the end of FY2009, the company's total processing capacity was 210 million tons per annum. In FY2009, the output of gasoline, kerosene, and diesel reached 113.69 million tons.The company also produced 26.87 million tons of chemical light feedstock in FY2009. The marketing and distribution segment of Sinopec owns and operates oil depots and service stations in China, and distributes and sells refined petroleum products (mainly gasoline and diesel) in China through wholesale and retail sales networks.The company operates the largest sales and distribution network for refined petroleum products in China. In FY2009, in China, it distributed and sold approximately 124.02 million tonnes of gasoline, diesel, and kerosene including jet fuel, representing a market share of approximately 60% in China. All of Sinopecs retail sales are made through a China Petroleum Director General of Financial Department Wang Xinhua 539000 CNYSenior ManagementVice PresidentZhang Kehua 525000 CNYSenior ManagementVice PresidentZhang Haichao 525000 CNYSenior ManagementVice PresidentJiao Fangzheng 362000 CNYSenior ManagementVice PresidentLei Dianwu 440000 CNYSenior ManagementSecretary to the Board of DirectorsChen Ge China Petroleum and in 2000, he was appointed as the President of the company. He was appointed as Vice President of the company in 2001 and was appointed as its Senior Vice President in 2003. Zhang Jianhua Board: Executive Board Job Title: Senior Vice President and Director Since: 2006 Age: 45 Mr. Jianhua has been a Senior Vice President and a Director at China Petroleum and as the President of Sinopec Shanghai Gaoqiao Company in 2000. Mr. Jianhua was appointed as the Vice President of Sinopec in 2003. He was also appointed as the Director General of Sinopec Production Management Department in 2003. In 2005, he was appointed as the Senior Vice President of the company. Wang Zhigang Board: Executive Board Job Title: Senior Vice President and Director Since: 2006 Age: 52 Mr. Zhigang has been a Senior Vice President and a Director at China Petroleum a Director and Vice President of Yangzi Petrochemical in 1998; and a Vice Chairman and President of Yangzi Petrochemical and Director of Sinopec Yangzi Petrochemical Company in 2002. He was appointed as Chairman and President of Sinopec Yangzi Petrochemical and Chairman of Sinopec Yangzi Petrochemical Company in 2003. He was appointed as the Chairman of BASF-YPC in 2004. He was appointed as the Deputy Chief Financial Officer of Sinopec in 2005.He also acted as the Deputy Chief Finance Officer of Sinopec in 2005. Su Shulin Board: Non Executive Board Job Title: Chairman of the Board of Directors Since: 2007 Age: 47 China Petroleum and the Chairman, President, and Secretary of the CPC Party Committee of Daqing Oilfield Co. In 2000, he was appointed as the Vice President and a member of the CPC Party Committee of CNPC, as the Vice President of PetroChina Co., as well as the Chairman, President, and Secretary to the CPC Party Committee of Daqing Oilfield Co. In 2002, he was appointed as a Director of the Board. In 2002, he was appointed as the Vice President and as a member of the CPC Party Committee of CNPC, and a Director and Senior Vice President of PetroChina Co. In 2006, he served as a standing member of the CPC Party Committee of Liaoning Province. In 2006, he served as a standing member and Head of the organization Department of Liaoning Provincial CPC Party Committee. In 2007, he was appointed as the President and Secretary to the CPC Party Committee of Sinopec Group. He is an alternative member of the 16th and 17th Session of the CPC Central Committee. Zhang Yaocang Board: Non Executive Board Job Title:Vice Chairman of the Board of Directors Since: 2009 Age: 56 Mr.Yaocang has been the Non Executive Vice Chairman of the Board of Directors at China Petroleum Director General of Financial Department Since: 2009 Age: 54 Mr. Xinhua has been the Chief Financial Officer and Director General of Financial Department at China Petroleum and impose penalties for pollution resulting from oil, natural gas and petrochemical operations, including criminal and civil liabilities for serious pollution.These laws and regulations could also restrict air emissions and discharges to surface and subsurface water resulting from the operation of natural gas processing plants, chemical plants, refineries, pipeline systems, and other facilities that the company owns. In addition, Sinopecs operations are subject to laws and regulations relating to the generation, handling, storage, transportation, disposal, and treatment of solid waste materials. It is anticipated that the environmental laws and regulations to which the company is subject to would become increasingly strict.These environmental laws and regulations could therefore have an increasing impact on the companys operations. China Petroleum & Chemical Corporation (Sinopec) Page 26 © Datamonitor China Petroleum & Chemical Corporation (Sinopec) SWOT Analysis TOP COMPETITORS The following companies are the major competitors of China Petroleum & Chemical Corporation (Sinopec) ExxonMobil Corporation PetroChina Co Ltd. CNOOC Limited Chevron Corporation Royal Dutch Shell plc BP Plc Eni SpA Gazprom Neft China Petroleum & Chemical Corporation (Sinopec) Page 27 © Datamonitor China Petroleum & Chemical Corporation (Sinopec) Top Competitors COMPANY VIEW A statement by Su Shulin, Chairman of the Board of Directors at China Petroleum and Chemical Corporation (Sinopec), is given below.The statement has been taken from the companys annual report for FY2009. Dear shareholders: On behalf of the Board of Directors, I would like to express our sincere gratitude to all our shareholders and the public for their care and support. In 2009, the global financial crisis and intense market competition posed severe challenges to the Companys production and operations. In particular, the beginning of the year witnessed plummeting price and demand for petroleum and petrochemical products, and a harsh contraction in E&P segment profits, while the refining, petrochemical and marketing businesses were faced with high inventories. Despite the challenges, the Company achieved impressive results by taking a series of proactive measures including vigorous efforts to develop new markets, targeted management for refinement on details, as well as structural adjustments, and so on. The E&P business maintained crude output volume with reduced costs and expenses while the price of crude remained sluggish. It increased exploration input for potential traps, and also invested resources in technological research and development for tertiary oil recovery from challenging reserves. As the international crude price gradually recover, the E&P segment realized good results and enhanced the sustainability of its business. Fully leveraging its capability to accommodate various crude feeds, the refineries endeavoured to expand throughput by running at almost full capacity since the second quarter of 2009. In the meantime, the refining segment introduced process optimization initiatives across several functions, from crude procurement and resource allocation, to inventory and logistics management, and product mix adjustment, thus generating better profits. In the chemicals business, the Company made more efforts to expand the market, and enhanced the integration of R&D throughout the production plan. It also continued to improve customer service and strengthened strategic alliances with key customers. Despite the unfavorable market environment, the majority of chemical plants operated at full capacity since March 2009, delivering excellent performance. Capitalizing on the well-established marketing network, logistics systems and strong brand, the Companys marketing business successfully expanded its operational scale in an oversupplied domestic market by adopting innovative marketing approaches, flexible promotional programs and customer-oriented after-sales service. In addition, the non-fuel business grew significantly, driving up non-fuel business revenue and realized good operational results. China Petroleum & Chemical Corporation (Sinopec) Page 28 © Datamonitor China Petroleum & Chemical Corporation (Sinopec) Company View Over the course of the past year, Chinas macroeconomy gradually recovered, and a fuel pricing policy paired with tax and fee reform were implemented in the domestic market.The Companys four business segments all achieved good operating performance, resulting from our effective counter-measures to the economic crisis, as well as from advantages gained from our integrated upstream, midstream and downstream business model. In 2009, the Companys total turnover, other operating income and other revenues, reached RMB 1,345.052 billion, down 10% year-on-year. In accordance with the Chinese Accounting Standards for Business Enterprises (“ASBE”), net profit attributable to equity holders of the Company was RMB 61.29 billion, up by 115.5% year-on-year. Under the International Financial Reporting Standards (“IFRS”), profit attributable to the equity holders of the Company was RMB 61.76 billion, up by 116.5% year-on-year. Both structure and quality of assets of the Company were constantly improved with the net assets up 14.6% year-on-year. In 2009, taxes and fees paid by the Company to the central and local governments totalled RMB179.05 billion.With the above achivevments, both economic returns and social responsibilities have been well fulfilled by the Company.The Board of Directors recommended a full year dividend of RMB 0.18 per share for 2009.The final dividend for 2009 was RMB 0.11 per share after deducting the interim dividend of RMB 0.07 per share. In 2009, the Company further improved its corporate governance.The Company successfully completed the rotation and succession of members to the Board of Directors and the Board of Supervisors, and also appointed members to the executive management team.The Company revised the “Articles of Association” and laid a solid foundation for standardized operations.Thanks to the strong support from its independent shareholders, the Company completed adjustment on the continuing connected transactions for the period from 2010 to 2012. In addition, continued efforts were made in strengthening refined management and internal controls to shape a unique management model and push its corporate governance to a higher level. In line with the Companys strategic targets for corporate development, the Outline of Corporate Culture Development was crafted to establish harmonious corporate values to support the continued sustainable development of the Company. In 2009, in accordance with the strategy focusing on “Resources, Markets, Integration and Internationalization”, the new Board made a three-year development plan for the Company from 2009 to 2011 and established its future development direction and corporate goals. In accordance with the new plan, the Company increased its capital expenditure to RMB 110.013 billion in 2009, which was primarily allocated to expand resources, increase reserve and output and to expand the market as well. A number of key projects, including Sichuan-to-the-East China Gas Project, Tianjin one-million-ton-per-year ethylene project and Zhenhai one-million- ton-per-year ethylene project, etc., have been completed or put into operation.The building of storage and transportation facilities for oil and chemical products progressed smoothly.These achievements have facilitated structural adjustments and product quality upgrading in major refineries. Sinopec International Petroleum Exploration & Production Co., Ltd. was established, a concrete step made in the Companys overseas expansion in the oil and gas business. In addition to enhancing our business position as a supplier of premium clean fuels to the public, the Company also played China Petroleum & Chemical Corporation (Sinopec) Page 29 © Datamonitor China Petroleum & Chemical Corporation (Sinopec) Company View an important role in domestic industry restructuring and regional economic development by contracting major equipment from and entering into a joint research and development program with domestic manufacturers. The Company has always attached great importance to social and environmental issues in order to ensure sustainable development .We have fully implemented the HSE management system and adopted a variety of methods in energy saving and emission reduction in particular CO2 emission reduction, so as to promote a low-carbon economy.Thanks to the company-wide initiatives in producing clean products through clean production processes, the Companys comprehensive energy consumption per RMB 10,000 turnover came down to 0.72 tonnes of standard coal, realizing the energy saving target in its 11th Five-Year Plan one year ahead of schedule. In 2009, the Company carried out a series of employee-focused programs with practical steps taken to improve the quality of the employee canteen and the health check system, as well as a general safety campaign called “I Safe”. In addition, we are actively participating in public welfare activities, including poverty relief and
