Star Metro - Sinopec Achieves Solid Operating Results in the First Half of 2026

Financial Highlights

• The Companyeffectively navigated severe challenges, demonstrating strong resilience in its businesses. Oil and gas output in the first half reached approximately 263 million barrels of oil equivalent, up by 0.3% year-on-year. Natural gas production reached approximately 741.6 billion cubic feet, up by 0.7% year-on-year; refinery throughput was 113 million tonnes; total refined oil products sales reached 101 million tonnes; ethylene production was 6.394 million tonnes.

Business Review

In the first half of 2026, China's economy maintained stable growth, showing a trend of shifting momentum towards new drivers and an improved structure. GDP grew by 4.7% year on year. Affected by geopolitical conflicts in the Middle East, international crude oil prices experienced wild fluctuations, with a rapid surge at the end of the first quarter and a significant decline after fluctuations at a high level in the second quarter. The average spot price of Platts Brent was USD92.6 per barrel, up by 29.1% year on year. According to the Company's statistics, domestic natural gas demand growth slowed, with consumption up by 1.6% year on year. Due to the dampening effect of high oil prices on demand and accelerated substitution by new energy, domestic refined oil products consumption declined by 8.6% year on year, among which gasoline decreased by 7.9%, diesel decreased by 11.5%, while jet fuel (kerosene) rose by 1.3% driven by holiday travel and the recovery of international routes. Domestic demand for major chemical products was weak, with ethylene equivalent consumption down by 9.9% year on year.

In the first half of the year, with focus on driving high-quality development through the initiative of a second entrepreneurial journey, the Company closely monitored market changes, dynamically adjusted production and operation plans, and effectively navigated impacts and multifaceted challenges far beyond expectations, demonstrating strong resilience in its businesses.

Exploration and Production

In the first half of 2026, the Company seized the opportunity of high oil prices, intensified efforts in high-quality exploration and profitable development to increase reserves and production, achieving a record high in domestic oil and gas equivalent output for the same period. In exploration, the Company actively acquired high-quality mining rights and stepped up natural gas exploration, making significant breakthroughs in shale oil in the Bohai Bay Basin, tight gas in the Sichuan Basin, and offshore natural gas exploration, while effectively proving shale gas in Ziyang and coalbed methane in Yulin-Ordos. In development, we accelerated the construction of crude oil production capacity in Jiyang and Tahe, as well as natural gas production capacity in offshore areas and the Western Sichuan marine facies. We also optimised the natural gas resource pool structure in promptly response to changing market conditions and accelerated the precise development of high-end and high value-added natural gas markets. The profitability of the entire natural gas industry chain reached a record high for the same period. In the first half of the year, the Company's oil and gas equivalent production reached 263.47 million barrels, up by 0.3% year on year, among which domestic crude oil totalled 127.68 million barrels, up by 0.7%, and natural gas production amounted to 741.570 billion cubic feet, up by 0.7%.

In the first half of 2026, the operating revenues of the segment were RMB154.6 billion, representing an increase of 6.9% year on year. This change was mainly due to the rise in international crude oil prices. The segment seized the opportunity of rising oil and gas prices, continued to enhance exploration and development efforts, further promoted reserves and production growth, and enhanced the profitability of the whole natural gas industrial chain, thereby achieving an operating profit of RMB28.7 billion, representing an increase of RMB5.1 billion or 21.5% year on year.

Exploration and Production: Summary of Operations

Refining

In the first half of 2026, the Company actively responded to challenges posed by geopolitical conflicts in the Middle East and drastic fluctuations in international oil prices. By integrating trade, storage, transportation, and production, we ensured stable operations across the value chain. The Company advanced diversified crude oil procurement and promptly optimised resource allocation. Based on changes in crude oil prices, we made timely assessments of marginal benefits, optimised unit utilization rates, and flexibly adjusted product mix. We continued with the "refined oil products to chemical feedstock" and "refined oil products to refining specialties" strategies, increasing the output of high-end carbon materials and other high-end products. By coordinating both domestic and international markets, the Company effectively managed exports of refined oil products to enhance the profitability of the industry chain. During the first half of the year, the Company processed 113 million tonnes of crude oil and produced 69.16 million tonnes of refined oil products.

In the first half of 2026, the operating revenues of the segment were RMB702.2 billion, representing an increase of 6.7% year on year. This change was mainly due to the year on year rise in prices of major products such as refined oil products. The segment actively responded to the impact of geopolitical conflicts in the Middle East by increasing crude oil procurement from non-Middle Eastern sources, closely following the market to adjust procurement pace, optimising product mix based on product profitability, and continuing to enhance integrated synergy and profitability. As a result, the segment realised an operating profit of RMB17.0 billion, representing an increase of RMB13.5 billion or 381.5% year on year.

Refining: Summary of Operations

Note: Includes 100% of the production of domestic joint ventures.

Marketing and Distribution

In the first half of 2026, facing tough challenges of dampened oil products demand due to high oil prices and accelerating new energy substitution, the Company adhered to a market-oriented and customercentric approach. We fully leveraged our integrated advantages, and continuously optimized resource allocation and marketing services. The sales proportion of high-grade gasoline continued to grow, and the domestic market share of refined oil products remained stable. By utilizing our network strengths, we promoted the development of diversified business formats, and achieved significant year-on-year growth in charging volume, automotive LNG sales volume, and hydrogen refueling volume. We accelerated the profitable development of "vehicle ecosystem" network and "home lifestyle" model, expanded comprehensive service scenarios, and enhanced the quality and efficiency of Easy Joy service. In the first half of the year, total refined oil products sales reached 100.99 million tonnes, with 79 million tonnes sold domestically

In the first half of 2026, the operating revenues of this segment were RMB741.3 billion, representing a decrease of 1.5% year on year. This change was mainly due to the decline in refined oil product sales volume resulting from the dampening effect of high oil products on refined oil consumption and accelerated new energy substitution. The segment continued to strengthen its marketing efforts and actively expanded businesses such as automotive natural gas and EV charging and battery swapping. However, affected by the dampening effect of high oil prices on refined oil consumption and accelerated domestic new energy substitution, the segment realised an operating profit of RMB5.7 billion, representing a decrease of RMB2.3 billion or 28.6% year on year.

Marketing and Distribution: Summary of Operations

Note: The total sales volume of refined oil products includes the amount of refined oil marketing and trading sales volume.

Chemicals

In the first half of 2026, amid the headwinds of weak demand and narrowing profit margin of the chemical sector, the Company implemented targeted strategies for each subsidiary and business chain in optimizing operations and maximizing value of product chains to reduce costs, expand markets, and improve profitability. Furthermore, we dynamically optimized unit operations, feedstock and product structures to lower feedstock costs and increase production of marketable products. Efforts were also made in developing new and high value-added products and expanding the space for value creation. Ethylene production reached 6.394 million tonnes in the first half of the year. We continued to deepen cooperation with strategic customers to consolidate business foundation and vigorously explore overseas markets. Total chemical products sales in the first half of the year amounted to 37.86 million tonnes, with export volume increasing by 70% year-on-year, reaching a historic high.

In the first half of 2026, the operating revenues of this segment were RMB238.1 billion, down by 1.6% year on year. This change was mainly due to the decrease in sales volume of products. The segment made great efforts to reduce feedstock costs, increase the potion of light feedstocks, dynamically optimised operating loads in line with market conditions, and expanded export scale. However, affected by the weak demand, the segment realized an operating loss of RMB0.2 billion, representing a reduction in loss of RMB4.0 billion year on year.

Chemical Major Products: Summary of Operations

Note: Includes 100% of the production of domestic joint ventures.

Safety and Health

In the first half of 2026, the Company continued to improve the system and operations of HSE management, fostering continuous enhancement of HSE awareness among all employees. We conducted in-depth safety and environmental protection campaigns, advanced risk control and potential hazard management in key areas, and steadily upgraded public safety and emergency response capabilities, maintaining stable and safe production. Measures were also taken to strengthen environmental management and improvement at workplace, with attention given to the occupational, physical, and mental health of employees both at home and abroad.

Innovation in R&D and Digital Intelligence

In the first half of 2026, the Company continued to strengthen basic and frontier researches, focused on breakthroughs in key technologies, deepened reform in the sci-tech system and mechanism, and built national-level innovation platforms in the energy and chemical sector. At the same time, we steadily promoted the deep integration of sci-tech innovation with industrial innovation. In terms of sci-tech development, our understanding of shale gas formation patterns has underpinned the discovery of ultradeep shale gas fields. Breakthroughs were made in synergistic oil flooding theories and intelligent drilling methods. We gained significant progress in the domestic production of wet-process T1000 carbon fiber production and successfully developed a new generation of ultra-high-strength, high-modulus, and high-elongation SHX60 carbon fiber. CHPPO industrial units with independent intellectual property rights and polypropylene insulation materials units were successfully commissioned and put into operation. In terms of digital intelligence, we further carried forward the "AI+" initiative with the launch of the industry's first digital expert, namely the "Fenghuo" industrial AI agent, while the capabilities of the Great Wall large model further improved.

Capital Expenditures

The Company continued to optimize investment in projects. In the first half of 2026, the capital expenditure was RMB48.7 billion. The capital expenditure for the E&P segment was RMB28.4 billion, mainly for the crude oil capacity building in Jiyang and Tahe, natural gas capacity building in Sichuan and Chongqing, and oil and gas storage and transportation facilities building. The capital expenditure for the refining segment was RMB6.9 billion, mainly for projects such as Guangzhou Petrochemical technical revamping, Maoming Refining transition and upgrading, and Qilu Refining of Local Crude Oil Upgrading and Technical Transformation, etc. The capital expenditure for the marketing and distribution segment reached RMB2.4 billion, mainly for the development of the integrated energy station network providing petrol, gas, hydrogen, power and services. The capital expenditure for the chemical segment was RMB9.8 billion, mainly for ethylene projects in Maoming and Qilu, and the aromatics project in Jiujiang, etc. The capital expenditure for corporate and others was RMB1.2 billion, mainly for R&D and digital intelligence projects, etc.

Business Outlook

In the second half of 2026, China's economy is expected to maintain stable growth. Domestic demand for natural gas is projected to rise, while demand for chemical products will remain weak, and that for refined oil products will still be affected by alternative energy. Given the impacts of geopolitics and changes in the global supply, demand and inventory, there will be greater uncertainties in international crude oil prices. With above backdrop, the Company will strenuously implement six major strategies, namely innovation-driven development, business transition and upgrading, resource security, market expansion, cost competitiveness, and opening cooperation, to fully unleash the effect of reform, and ensure steady and sustained progress in our second entrepreneurial journey. We will focus on the following aspects:

In E&P, the Company will focus on increasing reserve and production of oil and gas through intensified efforts in exploration and development, consolidating the foundation of energy and resources. We will advance resource discovery, profitable reserve growth, and new mining rights acquisition in a coordinated manner, and deepen high-efficiency exploration. We will accelerate the oil and gas capacity building in Jiyang, Tahe and offshore fields, and proceed with the fine development and adjustment in mature fields. We will further improve the production, supply, storage and marketing infrastructure of natural gas, integrate domestic and overseas natural gas resources, reduce the cost of the resource pool, and enhance the profitability of the whole business value chain. Our plan for the second half is to produce 141.83 million barrels of crude oil and 746.257 billion cubic feet of natural gas.

In refining, the Company will focus on the maintaining volume and improving profitability, optimize industry chain in line with the market changes, and enhance the intensive and efficient operation and integrated value creation. We will optimize the utilization rate of each subsidiary, fine-tune resources allocation in different regions, and up-scale profitable production. We will further proceed with the "refined oil products to chemical feedstock" and "refined oil products to refining specialties" approach, flexibly adjust the product mix, increase the output of high added-value and profitable products, and strengthen the highend carbon materials industry chain. We will expedite the structural adjustment projects to increase the concentration of advanced capacity. In the second half, we plan to process 113 million tonnes of crude oil.

In marketing and distribution, the Company will continue to enhance services for our clients, and raise the marketing quality and profitability. We will align procurement with marketing and coordinate volume with price, optimize resource allocation and marketing strategies, and consolidate our market position in refined oil products. We will further proceed with differentiated and targeted marketing strategies and improve retail management. We will optimize the service network layout, and facilitate the growth of businesses such as automotive LNG, battery charging and swapping and hydrogen energy. We will also strengthen our proprietary brands, refine the operation of convenience stores, scale up the vehicle ecosystem, and raise the quality and efficiency of Easy Joy service. In the second half, we plan to sell 77.68 million tonnes of refined oil products domestically.

In chemicals, the Company will adhere to the principle of developing "basic + highend" and "chemicals + materials", strive to cut costs, expand markets, minimise losses and increase profits. We will coordinate feedstock resources and diversify sourcing to cut costs, and optimise the unit utilization and production scheduling, and to keep high utilization rate of profitable units. Meanwhile, we will put more emphasis on developing new materials and increase their volume to expand market share. We will expedite the building of advanced production capacity to increase synergy, and speed up building a tiered and targeted customer management system. The mechanism for export market expansion will be further improved to grow global business. In the second half of this year, we plan to produce 6.8 million tonnes of ethylene.

In Capex, we plan to spend RMB82.9 billion to RMB99.9 billion in the second half. RMB43.9 billion will be spent in the E&P segment, mainly for the crude oil production capacity building in Jiyang and Tahe, the natural gas production capacity building in Sichuan and Chongqing, and oil and gas storage and transportation facilities building. RMB10.4 billion will be spent in the refining segment, mainly for projects such as Qilu Refining of Local Crude Oil Upgrading and Technical Transformation, Maoming Refining transition and upgrading, and Guangzhou Petrochemical technical revamping. RMB6.6 billion will be spent in the marketing and distribution segment, mainly for the development of the integrated energy station network providing petrol, gas, hydrogen, power and services. RMB18.4 billion will be spent in the chemical segment, mainly for the construction of ethylene projects in Maoming and Qilu, and the aromatics project in Jiujiang. RMB3.6 billion will be spent for corporate and others, mainly for R&D and digital intelligence development. RMB17 billion will be flexibly earmarked in view of market situations.

FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH IFRS ACCOUNTING STANDARDS

Principal accounting data

Principal financial indicators

The following table sets forth the operating revenues, operating expenses and operating profit by each segment before elimination of the inter-segment transactions for the periods indicated, and the percentage change between the first half of 2026 and the first half of 2025.

About the Company

China Petroleum & Chemical Corporation is one of the largest integrated energy and chemical companies in China. Its principal operations include the exploration and production, pipeline transportation and sale of petroleum and natural gas; the production, sale, storage and transportation of refinery products, petrochemical products, coal chemical products, synthetic fibre, and other chemical products; the import and export, including import and export agency business, of petroleum, natural gas, petroleum products, petrochemical and chemical products, and other commodities and technologies; and research, development and application of technologies and information; hydrogen energy business and related services such as hydrogen production, storage, transportation and sales; battery charging and swapping, solar energy, wind energy and other new energy business and related services.

Disclaimer

This press release includes "forward-looking statements". All statements, other than statements of historical facts that address activities, events or developments that the Company expects or anticipates will or may occur in the future (including but not limited to projections, targets, reserve volume, other estimates and business plans) are forward-looking statements. The Company's actual results or developments may differ materially from those indicated by these forward-looking statements as a result of various factors and uncertainties, including but not limited to the price fluctuation, possible changes in actual demand, foreign exchange rate, results of oil exploration, estimates of oil and gas reserves, market shares, competition, environmental risks, possible changes to laws, finance and regulations, conditions of the global economy and financial markets, political risks, possible delay of projects, government approval of projects, cost estimates and other factors beyond the Company's control. In addition, the Company makes the forward-looking statements referred to herein as of today and undertakes no obligation to update these statements.

Investor Inquiries:
Beijing
Tel：(86 10) 5996 0028
Fax：(86 10) 5996 0386
Email: [email protected]

Media Inquiries：
Hong Kong
Tel：(852) 2522 1838
Fax：(852) 2521 9955
Email: [email protected]

23/08/2026 Dissemination of a Financial Press Release, transmitted by EQS News.
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SOURCE: China Petroleum & Chemical Corporation

View the original press release on ACCESS Newswire

S.Morin--SMC