China Petrochemical Corporation

History

Domestic

In 1994, Sinopec was among the large industrial state-owned enterprises of China which were selected for a pilot program of restructuring as state holding companies, thereby enabling partial public listings of its subsidiaries' assets.

Sinopec Limited was established as a joint stock entity under the China Petrochemical Corporation Group (Sinopec Group) in February 2000. The company was simultaneously listed in Hong Kong, New York, and London in October 2000. The IPO raised $3.5 billion. A Shanghai listing was completed in June 2001. Prior to its operation as a company Sinopec's assets came from the Ministry of Petroleum Industry and the Ministry of Chemical Industry which partially privatized in the 1980s. Given its legacy asset base from Sinopec Group, analysts have categorized it as a more downstream oil player than PetroChina. However, since 1998 Sinopec has expanded into upstream endeavors. This expansion began with a state mandated asset swap with China National Petroleum Corporation (CNPC) which gave some of Sinopec's refineries to CNPC in return for Sinopec acquiring some of CNPC's upstream assets.

China entered the WTO in 2001 which some experts claim put additional pressure on their domestic oil industry to be efficient. In the lead up to going public, Sinopec cut over 200,000 jobs from its roster.

BP partnered with Sinopec, in 2005, to build SECCO an ethylene derivatives plant with an initial investment of $2.7 billion. It is located in the Shanghai Chemical Industry Park, and generates over 3.2 million tons of petrochemical products annually. In 2017, Sinopec bought out the remainder of BP's stake in SECCO through its Gaoqiao subsidiary for $1.68 billion. Gaoqiao's operations predate the creation of Sinopec and it operates 75 plants for producing finished petroleum products such as fuels, oils, organic compounds. Ineos bought out half of Sinopec's share of SECCO in 2022 as part of a broader partnership deal.

Sinopec operates the Jiujang Petrochemical Complex which was originally constructed in 1975 and has received a series of improvements over time. The refinery processes 8 million tonnes of crude oil per year. Xi Jinping visited the refinery, in 2023, when the company highlighted the importance of Socialism with Chinese characteristics and presented awards.

Sinopec posted a 6.8% operating margin for the 2006 financial year. Profit was limited in part by government price controls on downstream petrochemical products. The National Development and Reform Commission sets gasoline and diesel prices and the Ministry of Finance collects windfall tax on upstream profits. At the beginning of 2006, Chinese retail gasoline and diesel sales were not profitable for Sinopec and sales were hurting the company's financials. To pressure the NDRC, Sinopec and CNPC cut production causing long lines at the pump. This led to NDRC approving a 15% increase in the price at the pump. To offset losses from the price controls, the state gave Sinopec $1.1 billion in subsidy during 2005 and $647 million in 2006. This finance example demonstrates of Sinopec's implementation of policy adjusted profit. Chinese methods on how to articulate, quantify, and report the sometimes conflicting interests of profit and political policy have evolved during over time. Some commentators on the Shanghai Stock Market, where Sinopec trades, call these methods "valuation with Chinese characteristics". Sinopec demonstrated the "one profit, five rates" method in 2023. This method calls for assessing the company's performance with profit, "asset-liability ratio, return on equity, operating cash ratio, overall labor productivity, and R&D investment intensity".

In February 2007, Saudi Aramco and Exxon signed a deal with Sinopec to revamp the Fujian oil refinery and triple its capacity to 240,000 barrels per day (38,000 m3/d) by 2009. The Saudi Aramco investment is strategically aligned because Saudi Aramco produces a heavier crude oil which is not preferable for other Chinese refining facilities. Aramco, Exxon and Sinopec also signed contracts for a fuel marketing venture that will manage 750 service stations and a network of terminals in Fujian province. Their subsidiaries also expanded cooperation in Tianjin the following year. They invested over $3 billion from 2008 to 2019 expanding the ethylene production capacity multiple times and finally achieving 1.3 million tons per year of production. In Fujian, Sinopec also operates the Gulei Industrial Park. It began as a joint venture with a group of Taiwanese companies operating as Dynamic Ever Investments in 2015. The venture took $4 billion of investment and has a production capacity of 1 million tonnes of ethylene per year. At the time of its approval it was the only Taiwanese petrochemical joint venture in mainland China. It was approved by the Fujian branch of the NDRC which owns a 25% stake in the project. The plant began producing downstream chemicals in 2018 and became fully online in 2021. Phase two began, in 2024, when Saudi Aramco made an additional $9.8 billion investment in the facilities. These expansions are scheduled to be fully operational in 2030.

Sinopec completed construction of a new ethylene plant in Wuhan at the end of 2012. The construction of this plant was done as a joint venture with the South Korean SK Group. This facility was planned in alignment with the National Development and Reform Commission's goal of producing more ethylene domestically in order to rely less heavily on foreign imports. It will provide 800,000 tons/year which is a significant step towards the NDRC's 2015 goal of raising domestic production by 7.5 millions tons/year. In March 2013, Sinopec agreed to pay $1.5 billion for its parent company's overseas oil and gas-producing assets.

Zhejiang Oil Products Company was originally founded in 1950, but began operating under Sinopec in 1998. It is Sinopec's highest selling oil refinery and one of the most important companies in Zhejiang. Sinopec has continuously improved the refining capacity and it ranks as one of the largest refineries in the world. The refinery prioritizes output of non-fuel chemicals at a notably higher rate than comparable refineries. This large scale production, particularly of aromatic compounds hurt foreign competitors. This attracted further investment in China from Saudi Aramco which acquired a 10% stake in Zhejiang Oil Products Company in 2023.

Due to the COVID-19 pandemic, Sinopec reported a loss of 23 billion yuan in the January to June time frame of 2020. In 2021, they reported a 22% increase in revenue as the demand for fuel and oil slowly returned to normal. In 2022, the company reported a 25% net income increase in the first quarter. Diesel output was increased by almost 10% that year and the gasoline production saw only a 0.7% increase.

In 2021, Sinopec began a partnership with NIO, when they unveiled that a NIO Power Swap Station 2.9 would be put into the Sinopec Chaoying Station in Beijing. Additionally, the partnership was to include cooperation between the two companies in new materials, smart EV technology, Battery-as-a-Service (BaaS), construction of recreational facilities, as well as the purchase of vehicles.

China's imports of U.S. natural gas will more than double. In March 2022, a memorandum of understanding was signed between Sinopec and Aramco to strengthen the already existing ties between the companies and to improve their downstream operations.

The Hainan Baling Chemical New Material Company, a Sinopec subsidiary in Hainan, opened a one million tonne per year Styrene-butadiene (SBC) plant in 2023. This new facility made Sinopec the largest producer of SBC in the world at the time. Sinopec began operating the deepest oil well in Asia in 2023. As part of Project Deep Earth the drill went 9432m below Xinjiang. Sinopec and BP have worked together since Sinopec formed. Their joint venture in Zhejiang had 2024 gas stations in 2021. They signed a memorandum of strategic cooperation with BP at the Davos Economic Forum in 2024. Sinopec has set a goal of building 5000 new EV charging stations by 2025 and plans to cooperate with BP on achieving that goal. These and other of Sinopec's environmental goals are aligned with the Fourteenth five-year plan.

In 2025, Sinopec produced 44.22 million tonnes of light chemical feedstock, and processed 250 million tonnes of crude. The company revenue for the year was RMB 2.78 trillion.

International

Sinopec has demonstrated a willingness, characteristic Chinese national oil companies, to invest in foreign, often risky, infrastructure. These firms work in concert with the Chinese state owned financial sector via direct low cost financing and indirect infrastructure agreements between foreign nations and Chinese banks. Several experts claim that the role of direct financing support is not as important as indirect support. Large foreign purchases are particularly notable in the Chinese context because they require approval by the National Development and Reform Commission and the State Council. Sinopec made failed attempts to acquire Iranian oil reserves in 2001 and Kazakh reserves in 2003. In subsequent years, Sinopec relied more heavily on off-taker agreements to gain access to foreign markets. The 2008 financial crisis made a large impact on Chinese foreign policy and Chinese oil companies put a higher priority on mergers and acquisitions in the following years.

According to the OECD, foreign oil ventures are an attractive investment for Chinese national oil companies because China is a large importer of oil and wants to control its supply chain. Some Chinese observes agree with this assessment and highlight Sinopec's 2005 goal of importing 15 million tons of crude oil for refinement in China. China's Go Out policy explicitly stated, in 2001, that Sinopec should "make effective use of overseas resources, build the overseas oil and gas supply bases and diversify the oil imports". This was revised in 2006 to "broaden international oil and gas cooperation". According to the company, in 2022, foreign operations were staffed 74% by local workers rather than Chinese employees.

Sinopec began its partnership with Iran in 2001, and signed a 30 year deal to invest $70 billion in the development of Yadavaran Field in 2004. Contract negotiation for this program took three years such that technical work and funding did not actually begin until 2007. The US pressured China to block the investment due to sanctions, but Iran claims that pressure did not delay the deal. Iran expressed pleasure with the deal and stated the goal of replacing Japan with China as the primary exporter of Iranian oil. There is little agreement about the exact amount of oil and gas available through the Yadavaran project, but all claim that it is a large oil field by global standards. The first phase of drilling was completed in 2012 and production continued to expand. Sinopec claims to have ceased buying this oil due to US sanctions in 2019.

Amid rising global oil prices linked to the U.S.- Israel conflict with Iran, on 23 March 2026, Sinopec announced an increase in gasoline prices to 2,205 yuan per metric ton, effective 24 March. The National Development and Reform Commission subsequently limited the increase to 1,160 yuan per metric ton.

Governance

Sinopec is one of the "core" central SOEs overseen by SASAC.

The chairman of China Petroleum and Chemical Corporation, like all Chinese National Oil Companies, is a vice minister. This is a political appointment set by the Ministry of Personnel. This means that the post is always given to high ranking communist party members as a reward for career achievement in the industry. Due to the high ranking nature of China Petroleum and Chemical Corporation's leaders in the Chinese communist party, the party does not have total control over the company and the company can exert influence on the government to get support in financing, international agreements, and pricing. For example, even though the state owns China Petroleum and Chemical Corporation, the company did not pay the state any dividends until 2008. China Petroleum and Chemical Corporation also appoints a member to the Central Committee of the Chinese Communist Party. Chinese officials have seen some of Sinopec's investments as too politically risky. The Iran and Sudan oil partnerships in particular led to regulatory change by State-owned Assets Supervision and Administration Commission of the State Council to hold Sinopec's leaders personally responsible if risky investments cost the government financially.

Sinopec is governed by a Board of directors. The members are nominated by a committee including the chairman of the board and then board makes decisions on these nominations. The board has highlighted its achievement on diversity, including gender diversity, in its annual report. The report highlights that 10% of the members of Board of Directors are female and 31% of the employees are female. Sinopec's audits, like other publicly traded Chinese firms, are not subject to independent oversight.

The former head of the companies' board of directors Chen Tonghai was sentenced to death in July 2009 after being accused of corruption. He had been relieved of his post in 2007. He was replaced by Su Shulin who was formerly the head of CNPC. The company culture moved on from Chen and acted as if he had never existed.

Environmental and safety record

In 2004, Sinopec prospected for oil in the 1,550 square kilometers of Loango National Park in southern Gabon and encountered criticism for what domestic and foreign environmental critics said were poor and damaging methods. Primatology professor Christophe Boesch of the US-based environmental organization, the Wildlife Conservation Society (WCS), criticized the use of dynamite and heavy machinery in exploration and road construction by Sinopec through park, noting that it might drive native gorillas deeper into the jungle, where they would be outside legal restrictions on hunting. Gabonese law states that industries can extract oil from national parks, but must rehabilitate them to the prior condition. Boesch, and other international experts, have suggested that Sinopec use other methods such as horizontal drilling to minimize its environmental footprint. Sinopec's activities in Gabon's national parks were suspended in September 2006, by the Gabonese national parks council. In 2007, Sinopec redid its earlier environmental study, this time in conjunction with the Gabonese environmentalist group Enviropass and the World Wildlife Foundation, winning high marks from Gabonese, Western, and Chinese conservation experts. Shortly thereafter, Sinopec resumed production with more environmentally friendly methods.

On 21 December 2006, gas started leaking during the drilling of a test well by the Sinopec Southern Prospecting and Development Branch in Quingxi. 12,380 people were evacuated after the leakage occurred. It took at least three attempts and two weeks for the company to seal the leak.

China's top environmental watchdog warned Sinopec in 2007 to stop operations at one of its oil fields due to chronic river pollution. Zhongyuan Oilfields Petrochemical Company, a unit of Sinopec, had failed to meet waste water treatment requirements and had been ordered to pay a pollution fine and operations had to be halted, according to the State Environmental Protection Administration (SEPA).

Guangdong Provincial Environment Bureau (GPEB) had also issued a red sign warning to 19 companies, including Sinopec Guangzhou, in February 2008. By GPEB's standard, the companies that have involved in excessive emissions or caused serious environmental pollution accidents will be given the red sign warning and will be placed under strict supervision.

Renewable energy

As of 2021 Sinopec was the largest supplier of geothermal energy in China. Sinopec plans to expand this with the goal of creating what their leadership calls "smogless cities".

Sinopec has developed a megatonnes carbon capture, utilisation and storage (CCUS) project in China. It consists of two parts, the Sinopec Qilu carbon capture and the Shengli Oil Field CO2 shifting and storage. The project has been operational since January 2022. Sinopec has partnered with other firms for additional research and development CCUS projects.

By 2021, Sinopec was already the largest Chinese producer of grey hydrogen which is hydrogen fuel produced via petrochemical processing without recapturing the carbon. In 2023, Sinopec constructed its first solar powered green hydrogen facility in Xinjiang which plans to produce annually 20,000 tonnes be transported to and consumed by Sinopec's Tahe refinery. Sinopec's Demonstration Project of Hydrogen Transmission Pipeline from Ulanqab to Beijing-Tianjin-Hebei Region will connect additional grey, blue, and green hydrogen projects to Beijing by building a pipeline transportation network from Inner Mongolia to Beijing. Sinopec claims a lack of transportation infrastructure is one of the main barriers to hydrogen adoption. One such example is a 20,000 tonne per year green hydrogen wind farm built outside Ordos City in 2023.

Research Institutions

Sinopec operates several research institutions. It has operated the Research Institute for Petroleum Processing (RIPP) since before its IPO. The RIPP began operation in 1956 and continues to create new patents which Sinopec can leverage in its operations. In addition to fuels and petrochemicals, Sinopec develops lubricants for use in automotive, industrial and marine applications.