Sinopec to spend $14.2 billion to boost oil, gas output

China Petroleum & Chemical (Sinopec) said it plans to increase oil output by 2.1% to 291.1 million bbl in 2007, while production of natural gas will increase by 10.1% to 282.5 bcf.

Eric Watkins
Senior Correspondent

LOS ANGELES, Apr. 11 -- China Petroleum & Chemical (Sinopec) said it plans to increase oil output by 2.1% to 291.1 million bbl in 2007, while production of natural gas will increase by 10.1% to 282.5 bcf.

To achieve the results, Sinopec said it will step up its capital investment by 37.9% to 110.1 billion yuan or $14.2 billion in 2007 to boost fuel and petrochemicals output and to discover new reserves of crude oil and natural gas.

It said the projected expenditure for exploration and production segment is 53.1 billion yuan, which will be used to speed up the construction process of the "Sichuan-to-East China" gas project and to strengthen oil and gas exploration and production in northeast Sichuan, Ordos, Tahe oil field, and Southern Tianshan Mountain.

Sinopec said its projected capital expenditure for refining segment is 22.7 billion yuan which is planned primarily for its new 205,500 b/d Qingdao refinery, currently under construction, its Bohai Bay crude oil terminal, and expansion and revamping of its Gaoqiao refinery in Shanghai and its Yanshan refinery in Beijing.

For its chemicals division, Sinopec said the projected capital expenditure is 19.46 billion yuan which is planned for Fujian, Tianjin, and Zhenhai's ethylene projects and to promote the expansion, revamping, and auxiliary facilities construction for monomers of synthetic fiber and organic materials in Yangzi, Shanghai, and Jinling Petrochemical.

The company said projected capital expenditure for marketing and distribution segment is 12 billion yuan, which will aim to optimize and improve the marketing network of refined oil products and accelerate the construction of the pipelines and oil storage for refined oil products.

It said the projected capital expenditure for corporate and others is 2.8 billion yuan.

The announcements came as Sinopec reported that its net profit totaled 53.9 billion yuan in 2006, up nearly 30% from 41.5 billion yuan in 2005. It said strong sales and moderating crude oil prices in the latter part of 2006 helped offset a tripling in refining losses.

Contact Eric Watkins at hippalus@yahoo.com.

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