SHANGHAI – Sinopec Cuts Capital Spending By 2.5 pc. China Petroleum & Chemical Corp, or Sinopec, will trim capital expenditures in 2020 by 2.5% from last year. This comes amid plunging oil prices and tepid fuel demand caused by the coronavirus outbreak.
According to details, Sinopec plans to spend 143.4 billion yuan ($20.21 billion) this year. This includes 61.1 billion yuan on upstream exploration in an oilfield in northwestern China. As well as the construction at two shale-gas fields in southwest China.
A statement released by Sinopec said the following. “Due to the coronavirus outbreak, Sinopec is adjusting the 2020 production and operation plans in accordance to market trends. The company initially plans to maintain stable crude oil production and to increase output of natural gas.
Sinopec Cuts Capital Spending By 2.5 pc.
Sinopec has been boosting its spending in response to Chinese president’s call to increase domestic oil and gas output. The cuts will mainly come from Sinopec’s refining units, which will reduce spending by 9 billion yuan. The company produced 284.22 million barrels of crude oil in 2019.
However, companies are cutting budgets this year after the collapse in global crude oil prices and concerns over waning refined oil consumption. Analysts indicate that breakeven costs for most of Sinopec’s production range between $50-$60 per barrel, much higher than the current price of benchmark Brent crude at $25.
It also produced 1,048 billion cubic feet of natural gas in 2019, up 7.2% from 2018. Sinopec on Sunday also reported a 8.7% fall in net profit last year due to shrinking refining margins amid industrial overcapacity and lukewarm fuel demand.