In 2024, China's three largest state-owned oil companies posted sharply diverging results. CNOOC was the only firm to report year-on-year growth in both revenue (+0.9% YoY) and net profit (+11.4%). PetroChina delivered the highest overall profit, with a modest 2% net profit gain despite a 2.5% drop in revenue. Sinopec saw declines in both revenue (-4.4%) and profit (-16.1%).
Upstream Holds Firm: Higher Output, Lower Costs Offset Softer Prices
Despite a year-on-year decline in oil and gas prices - Brent crude futures averaged $79.86/barrel, down 2.1%, while Europe's TTF gas benchmark fell 1.5% - all three oil giants reported notable gains in upstream earnings.
- CNOOC: Oil and gas sales revenue rose 8.45% YoY, while net profit increased 11.4%. Net production grew 7.2% to a record high, and unit production costs per barrel fell 1.1%.
- PetroChina: Upstream exploration and production (E&P) profit rose 7.4% YoY, with net output up 2.5%. Segment expenses edged up only 0.2%, aided by lower crude prices that reduced special oil gain levies.
- Sinopec: Although overall profit declined, upstream profit surged 29.2% YoY, making it the company's largest and only growing segment. Segment costs fell 5.6%, driven by lower LNG import costs and decreased special oil gain levies.
Downstream Drag: Refining, Marketing and Chemicals Under Pressure
Refining: Profits Halved, Throughput Decline
- A 13% drop in crude prices from Q2 to Q4 (from $85.03 to $74.01/bbl) triggered inventory write-downs. Combined with weak demand, refining profits in 2024 fell 49.7% YoY at PetroChina and 73.9% at Sinopec. Sinopec's refining business posted consecutive quarterly losses, while PetroChina remained profitable but saw refining profits fall 26.4% compared to H1.
- Crude throughput slipped 1.5% at PetroChina and 2% at Sinopec. The two companies reduced diesel yields by 1.6 and 2.1 percentage points, respectively.
Refined Oil Marketing: Volume and Margins Fall Sharply
- Profits for the refined oil sales segment declined 31.2% at PetroChina and 23.9% at Sinopec, with H2 profit down 36.8% and 64.5%, respectively compared to H1.
- Domestic refined oil sales volume fell 2.8% for Sinopec and 3.5% for PetroChina, pressured by rising EV adoption and LNG truck usage.
Chemicals: PetroChina Gains while Sinopec Faces Deeper Losses
- Sinopec: Higher naphtha feedstock costs (+2.4%) widened chemical segment losses to 3.77 billion yuan.
- PetroChina: With a smaller chemical footprint and self-supplied feedstock, the company boosted output of high-value-added products and new materials, lifting segment profit by 2.47 billion yuan.
2025 Outlook: Upstream Steady, Midstream and Downstream Face Structural Headwinds
As 2025 marks the final year of China's seven-year plan to boost oil and gas reserves and production:
- Upstream remains the growth anchor: All three oil giants plan to lift output. CNOOC targets a 6-8% increase, while PetroChina continues scaling shale gas production. Upstream's double-digit gross margins remain a key earnings stabilizer.
- Downstream pressures to persist:
Refined Oil Products: Gasoline demand is projected to fall 3-5% due to EV displacement. Diesel faces ongoing substitution by LNG as transportation fuel used in heavy-duty trucks. Refined oil product (gasoline, diesel, and jet fuel) yield is expected to remain flat.
Chemicals: U.S.-China tariff tensions weigh on exports. Players dependent on outsourced feedstocks such as Sinopec will face continued margin pressure.
In April, GL Consulting published a special edition of China (Energy Transition) Policy Perspective Spotlight - U.S.-China Tariff War Hits Ethane and LPG Hardest, Spurs Uptick in Naphtha Demand, analyzing the key impacts of the latest U.S.-China tariff escalation.
To get the detailed full text, send an email to glconsulting@mysteel.com.
