Top Asia oil refiner Sinopec's 2006 net up 30 pc

Hong Kong, Apr 10: Top Asian oil refiner Sinopec Corp. posted a better-than-expected 30 percent rise in 2006 earnings, as slipping crude prices and a one-off compensation payment from the government helped cushion refining losses.

State-run Sinopec expected net profit to rise more than 50 percent in the first quarter of this year, based on Chinese accounting standards.

With crude oil prices likely to hold steady this year, investors foresee double-digit net profit growth for Sinopec in 2007. But its fortunes hinge also on whether Beijing will allow it to charge more for refined products.

A top economic planning official said last month that China would adopt a cautious approach to reforming energy prices to better track international levels.

Analysts and executives say Sinopec's refining arm was likely to have bounced into the black in the fourth quarter, thanks to a sharp drop in crude prices.

Global oil prices tumbled more than 17 percent in the second half of 2006 after rising to a record peak of a barrel in July. They now hover around a barrel.

Sinopec, which vies with PetroChina Co. Ltd. and CNOOC Ltd.

to supply the world's second-largest oil market, said its full-year net profit came to 53.91 billion yuan (US.97 billion) versus 41.46 billion yuan a year earlier.

The result beat a consensus forecast for 50.12 billion yuan from 20 analysts surveyed by Reuters Estimates.

State-run Sinopec, whose crude runs rose 4.6 percent to 146.32 million tonnes in 2006, won a 5 billion yuan government rebate in December as one-off compensation for refining losses caused by government caps on refined oil product prices.

Sinopec, also China's second-largest oil and gas producer, pumped 2.3 percent more crude and 15.6 percent more natural gas in 2006. But like its rivals, it would have to pay a windfall tax on oil.

Shares in Sinopec rallied 87 percent in 2006, outperforming PetroChina's 74 percent rise and CNOOC's 41 percent gain.

The index of Hong Kong-listed Chinese firms jumped 94 percent last year.

Sinopec trades at nearly 11.4 times forecast earnings, cheaper than Exxon Mobil's 12.3 but pricier than BP's 10.8.

Reuters