This follows a 98% year-on-year drop in net profit for 2024 reported by Sinopec, the world’s largest oil refiner by capacity. The Chinese company, formally known as China Petroleum & Chemical Corp, recorded the highest-ever quarterly net income of 50.3 billion yuan. This increased value is approximately equal to just under $6.94 billion. However, according to one filing with the Shanghai Stock Exchange. That’s a decrease of 16.8% in net profit. This decline can be attributed to falling crude oil prices and the rapid expansion of the new energy vehicle (NEV) sector.
The financial results are prepared in accordance with Chinese accounting standards. They shine a light on the challenges Sinopec is facing as it tries to pivot into a new energy landscape. With crude oil prices inversely soaring at the same time, the short squeeze is on for traditional oil refiners such as Sinopec. The NEV sector is moving full speed ahead. As the company continues navigating through this new, evolving landscape, this creates immense challenge and opportunity.
Sinopec’s reach stretches into multiple sectors such as oil refining, gas stations, and now more so, the NEV sector. They have amazing company for such a small region. In Qingdao, Shandong province, China, you can visit one of its member’s gas stations. Sinopec customers at the Qingdao station are very dependent on Sinopec for fueling convenience. That happens all the time. Recently, an out-of-town customer experienced this firsthand when she had her vehicle’s tank filled at the store.
Profit took a huge nosedive. This trend is indicative of the difficulties that traditional oil companies have been experiencing in the wake of volatile oil prices as well as a shift towards sustainable energy solutions. As the NEV market gains traction, companies like Sinopec are compelled to innovate and potentially diversify their portfolios further to maintain competitiveness.