Top Asian oil refiner Sinopec estimated that its net profit in the first half of this year would fall by more than 50 percent compared with the same period a year ago after soaring crude prices pushed its refining business deep into the red.
Sinopec said in a statement to the Hong Kong stock exchange that its net profit in the first half of 2007 stood at 34.925 billion yuan and earnings per share at 0.403 yuan in accordance to Chinese accounting standards.
"This year, international crude oil prices have been continuously climbing. Due to the strict control over refined oil prices in the People's Republic of China, a distortion to the correlation of the refined oil prices and crude oil prices occurred," the company said in the statement.
Sinopec said it had taken various measures to guarantee the supply for the refined oil market in China, which resulted in great losses in the oil-refinery business and massive decline in overall performance in the first half year.
State-run Sinopec and PetroChina have found themselves squeezed between skyrocketing crude prices, which hit a record $146 a barrel this month, and government-set oil product prices.
Compounding their woes, they operate under an obligation to continue supplying the world's largest oil market after the United States, regardless of losses incurred.
Shares of Sinopec have fallen by more than 36 percent so far this year to end at HK$7.48 on Thursday.