Sinopec admits 14% profit drop

Asia’s biggest refiner to look overseas to restore growth.

China Petroleum & Chemical Corporation or Sinopec said its net income at Sinopec fell 14% to US$10.1 billion from US$11.8 billion year-on-year.

It expects costs to increase as it upgrades facilities to improve fuel quality and combat air pollution. As a result, Sinopec is looking abroad for growth opportunities. Declining domestic fields and government price controls are also prompting foreign expansion.

Analysts said Sinopec’s refining business might have already become profitable in the fourth quarter of last year and expects the refining business to be better this year.

Sinopec will spend US$5.4 billion on refining this year, and will focus on its fuel standards upgrade projects. It spent US$5.3 billion on refining in 2012.

Sinopec’s oil and natural gas production last year rose 4.9% from the previous year to 428 million barrels.