Q2 2022 China Petroleum & Chemical Corp Earnings Call (Chinese, English)
Good morning, ladies and gentlemen.
Welcome to Sun <unk> 2022 interim results announcement.
Here at Sinopec head office, we are joined by Chairman My own show precedence you bought was high.
Direct us Mr jobs don't Italy, Ichi, Mr. Leo Li and Mr. Leo home being independent director, Mr. Beaming, Jan Chairman of the Supervisory Board Mr. John Scholl phone CF Oshell don't while V T and Board Secretary Walden show.
The presentation has been uploaded to the company's website you can view it online.
Today's presentation includes three parts first the president and CFO . So.
We will highlight the 2022 interim performance, both overview and by each segment.
As the operational plan for the second half then chairman Mario and soon we will deliver a speech finally, we will have a Q&A session.
Now, let's welcome President.
Ladies and gentlemen, welcome to today's results announcement and we thank you for your support.
First have.
I'll be brief you on our performance in the first half of 2022.
In the first half.
<unk> economic growth slow down.
China effectively coordinated the pandemic prevention and can show with economic and social development GDP increased by two 5% year on year International crude oil prices rose sharply and for up to 80, the dramatically the average spot price of plans brand towards OE to U S dollars per barrel.
<unk>.
Harper by 66% year on year domestic natural gas demand remained stable.
According to our statistics due to the impact of high oil prices and COVID-19 domestic demand for refined oil products shrank.
The amount in Q1 increased slightly year on year, yet in Q2, the amount of dropped significantly.
Mastic demand for major chemical products remained stable.
We leveraged our integration advantages responding to market changes.
Carried out whole industry Chang optimization increase production the marketing coordination.
Spanish market in sales and achieve the best same period performance in history.
Upstream.
Ceased opportunity of high oil prices increased oil and the gas reserves and production and improved performance.
Refining we optimized crude procurement adjusted product structure to increase the use of chemical feedstock.
And specialties market.
Marketing and distribution, we focused on customer demand demand further expanded market and sales and the transformed to a comprehensive energy service provider.
Chemicals, we optimized the feedstock structure maintained high utilization of profitable.
Facilities and increased output of high value added products such as E V. A P. We use we deepen reform of our scientific technology system and mechanism increased investment and improved innovation efficiency.
Revenue 161 trading van up by 27, 9% year on year, EBIT 70 point for beating them.
Profit attributable to shareholders of the company was $44 5 billion again up by 10, 5% year on year EPS.
P S 0.367 van.
We increased the low cost of financing and continue to optimize that structure.
In the first half financing cost was $2 four 1% 0.34 percentage points lower than that at the beginning of the year.
As of June 30, the company's debt to asset ratio was 54.8% maintaining a sound position to net assets attributable to the shareholders of the company was $786 two bidding yet.
By what 0.6% over the beginning of the year.
The company's capital tied up even tree increased significantly due to rising oil prices.
Facing severe situation, we balance the production and sales of their whole business chain took.
Took.
Multiple measures to reduce tied up controlled capital outflow and accelerated collection.
Net cash from operating activities.
4.9, beating them.
Including minus 46.8, beginning in Q1 and $51 7 billion area in Q2.
Net cash used in investment activities 51.1 bidding them net cash from financing activities 75 point to be Nguyen.
Cash and cash equivalents and term deposits at end of the period.
$233 9 billion again meeting the need for capital for our future development.
We have always focused on shareholder return in view of the cash flow future development and the return for our shareholders.
The board of directors proposed to dispute distribute interim dividend of 0.16 Gram per share.
And expect a total dividend of $19 four beating again.
The annualized dividend yield of each shares worth about 10%.
The board of Directors has approved the detailed plan of share buyback and we will repurchase shares and its shares at a proper time.
For investment.
The company emphasized on quality and profitability.
Capex for the first half was $64 seven bidding again.
E N P.
$33 3 billion again meaningful oil gas E&P storage and transportation facilities construction.
Refining eight nine beating them.
For refining structure adjustment projects and it's in the high phase II expansion.
Marketing and distribution $3 1 billion, we are meaning for the construction of service stations integrated LNG stations.
And logistics facilities.
Chemicals.
Jean <unk> van many for the construction of ethylene projects in high <unk> and the Tianjin Nankai.
Joe John .
Aromatics, Shanghai Phase II, and Egypt PGA project.
We actively address climate change issues Sinopec 2030 carbon take action plan.
Further promoted the energy efficiency improvement plan.
And implemented C O two mapping and other greenhouse gas emission reduction measures.
The first the median time since you ask project in China was completed and put into operation.
We reduced greenhouse gas emission by 1.59 million tons of steel to equivalent.
Recycled and reused.
745000 tons of C. O two recycled 390 million cubic meters of methane equivalent to reducing 5.85 million tons of <unk>.
<unk> equivalent.
We made every effort to promote HSE management.
Strengthened pandemic prevention Concho and safeguard the.
Occupational physical physical and psychological psychological health of employees at home and abroad.
Further promoted the centralized management of safety risks in the gas safety and put in place special program of contractor safety, we continue to implement a green enterprise ex plan and did our utmost in protecting ecological environment, along the river and the yellow rhythm.
The C O D and S. O. Two emissions were further reduced our solid waste will 100% properly dispose at all.
Now I'd like to invite CFO , so don't want to present our results.
By each segment.
Yeah.
Yeah.
Yeah.
Thank you Mr. You're about right now.
Operational results by segment.
In upstream.
These new opportunity of rising oil prices.
And E&P consolidated the foundation of resources.
<unk> to increase the reserves the production profit.
<unk>.
Basic research Janssen degrees exploration and trap create exploration new regions and areas.
For oil and gas discoveries were made.
Including breakthroughs, there shouldn't be deeper projected in Karam Nathan.
Shale oil fields exploration in Bohai Bay Basin.
Deep exploration.
Sichuan basin.
Continental phases shale gas exploration.
In development.
We accelerated the capacity building of major LLC, such as the <unk>.
And offshore blocks Janssen deficient adjustments or fine tune to development this mature fields.
Promoting the construction of key natural gas production capacity in Sichuan Basin, and Erdos basin, optimizing the higher natural gas value chain to boosted profit in the first half of the year the company's buying gas production reached 242 million barrel oil equivalent.
By two 9% year on year.
With domestic crude production reached $124 6 million barrels and natural gas production totaled 613, four 9 billion cubic feet a day five 4% a year on year.
In the first half the company realized the price of crude was $95 for a U S dollars per barrel, an increase of 63, 9% a year on year and that is natural gas with 1.74 per cubic meter.
This 14, 5% the company with the upstream cost control resulted in essentially flat lifting costs. Despite the rise in purchased the material MCU.
In the first half the E&P segment achieved an EBIT of $28 2 billion.
The increase of 264% over the same period last year.
In refining the company responded to the challenges brought by high oil prices and COVID-19 coordinated to production and marketing adjusted in the utilization and product suite.
And maintained a stable operation in Q1.
<unk> profitability and release of production capacity in Q2, we adjusted the structure in line with the pandemic situation.
The company optimized and accrued procurements and resource allocation to reduce costs, we experts my data.
Q chemicals, the inch specialty products with share of high graded lubricants for their increased.
<unk> processed a 121 million tonnes of crude down by 4% producing $68 nine 9 million tons of refined oil products.
The company closely following the market demands janssen under structural adjustments and increasing the production of high value added products. The Ana profit oriented manner benefiting from the inventory gangs. They brought by the rising oil prices and the company achieved a refining margin of 11, one <unk> per barrel and an E basis.
A 30 point do you believe in.
The unit cash operating costs, the increase a year on year as a result of higher international commodity prices and increased nickel silver jewelry materials. The M C.
In marketing.
Facing serious market competition and the complex in a pandemic situation.
The company's Jess and the integration of production sales.
We optimize the resources allocation. If there are no effort to expand sales and increased profitability, we focus on customer experience and create our targeted marketing strategies to be actively expanding low sulfur bunker fuel market and further consolidated our market position.
We're expanding our sales network digitalization and transformation to an integrated energy service provider.
In the first half.
Sales of refined oil products that were $98 four 2 million tonnes of waste total domestic sales volume of work somebody 846 million times.
In the first half facing tough market situation. The company give full play to Miss integration now marketing network advantages and achieved higher ebay 17 since unveiling then from marketing segment.
Meanwhile, we strengthen the development and sales of our own branded commodities improved the quality and profitability of Matthew business with revenue of $19 3 billion and operating profit profits of $2 6 billion, an increase of 12, 9% a year on year.
In chemicals, the company responded to the market dynamics by optimizing our structure as the facilities.
<unk> product properly scheduling maintenance and increasing the load of profitable facilities. We promoted the building of the zones to production capacity the proportion of high value added products, though was enhanced in the proportions of the new synthetic resident of specialty materials synthetic rubber and synthetic fiber increase that by one point for <unk>.
Seven.
Six eight percentage points respectively.
<unk> production was 6.85 million tons, an increase of five 9%.
<unk> cooperation with strategic customers.
<unk>, Fannie exports and exploring high end markets.
Company achieved a total chemicals operation volume of 43 8 million tons of sustained growth.
In the first half of the year high oil prices led to higher feedstock prices combined with a lack of downstream chemical production, resulting in a significant narrowing of pretax margins and EBIT for $2 3 billion yen.
Unit costs have increased as a result of rising commodity prices such as coal powered MCU.
Next I would presume production and operation plan for the second half of the year.
Looking ahead, the risk of deflation in the global economy is expected right. We're trying to think I'm a growth is projected rebound and remain within reasonable range domestic demands before I recently now are producing chemicals that are expected to pick up and that for natural gas will maintain growth taking into account the impact of the geopolitics.
And changes in global supply and demand international oil prices are expected to remain high and volatile.
The company will further enhance marketing foresight.
Operational synergies.
<unk> innovation and development optimization market expansion reform and safety and environmental protection will focus on the following aspect.
A&P.
We'll continue to increase exploration efforts.
Five to achieve strategic breakthroughs and increased reserves with the scale and profit pools.
The oil and gas production and profitability and lower breakeven point.
Full year oil and gas production plan is 419 million barrels of oil equivalent by two 1% a year on year in refining.
Integrate and coordinate production marketing shifts there from producing refined oil products with two chemicals, yes.
Two products increased production of popular and high value added products.
Fran any refinancing recruited 241 million tons.
In marketing, we will seize the opportunity of a rebounding market demand.
Sales and promote the construction of integrated it Energy's nations.
We plan to market 165 million tons to refine all your production three out of the year.
In chemicals.
We're closely follow market demand optimize center Joseph structures of feedstock productive facilities than a regional resources.
You achieve efficient operation.
Full year ethylene production plan is a $14 5 million tons or by 5% year on year.
In the second half of the year the company will focus on quality development and strive for sounds performance. Thank you.
Okay.
Thank you President <unk> and CFO show now have you gave the screen to chairman MA you'll show to give a speech.
Dear friends from capital markets and the media.
Good morning.
And thank you again for joining this conference call.
Just now present.
And the CFO show.
Presented our first half results.
Let's be honest and second half operational plan.
Okay.
Facing the complex business environments and was <unk> <unk>.
Nick situation.
The company focused on optimization.
Transformation.
Innovation reform.
Governance and risk controls.
In the first half we recorded high quality growth and the best profit number.
And.
We maintained a solid financial position reached laid a strong foundation for continued.
Quality development.
Always attach importance to value management on the shareholder return and the board has decided on an interim cash dividend of 0.16 <unk> per share.
This will translate into an <unk>.
Annualized the Tvs into huge off.
8% and 10% for Asia and <unk>, respectively.
Based on the weighted average prices for the <unk>.
First half.
Meanwhile, the board has.
So approved the detailed plan for share buyback, which will be the first time since our IPO.
Based on the pre simple maximize incorporate the value and the safeguards and shareholder interest.
Maybe you implement such buyback.
When appropriate.
Yeah, and HCR market.
Currently international oil prices are really growing at high level with potential risks risks of wide.
Fluctuations.
The recurrence of COVID-19 cases also as to CVR challenges for our operations.
It is also evidenced that the China's economic fundamentals of strong resilience and potential anti risk ability and long term improvement.
And this will not change.
Economic growth.
And the social development.
Accelerating to return to normal.
And.
Demand for oil products and chemicals are picking up.
In the coming months, you will see favorable opportunities press ahead, with optimizations market development costs and efficiency improvement.
I'm trying to strive for good whole year results.
The transformation of the Energen chemical industry is pacing up with low carbon under high end paradox as emerging trend we.
We will implement the strategy of building a road to the <unk> company and achieve our growth with a high quality profitability.
And.
Hi competitiveness.
We view stress innovation.
Further integrating into international innovation system, maybe improve application of R&D advances.
Janssen talent pool and the boost.
R&D capability.
Maybe I'll focus on technology breakthroughs.
And the applications related to oil and gas resources refining of high end cameco and new materials advanced co cameco.
<unk> new energy.
We view sharpen competitive edge in line with the requirements of more of the industries and new development pattern.
Okay.
So yeah in the beauty focus he used to be will be stabilizing.
Oil production of increasing increasing gas output, reducing cost and improving indicators, such as RP ratio and breakeven point.
The success in the Tarim basins shouldn't Bay deep Earth project, and the shale gas exploration on the east.
Further boost our confidence for future development.
For refining and chemicals, maybe a focus on improving quality efficiency and operating maybe accelerates, replacing underperforming assets on beauty integrated classes.
Maybe you paced apathy shift to chemicals and specialty products.
We will move up the value chain to produce more high end polyolefin and the rubber high performance fiber and other new materials.
For marketing.
We will strengthen the integrated customer service model.
Differentiated and sustainable competitiveness.
Bolstering.
New profit growth potentials.
We will drive growth.
Increased Korean development capability.
More efforts will be made on green and low carbon technology R&D.
And increasing energy efficiency.
<unk> steadily achieving the dual carbon carbon goes maybe you grow the new energy business.
Joel <unk> scaled green hydrogen application in refining and chemical sites.
Develop domestic hydrogen stations network and debuted hydrogen innovation platforms with our partners along the industry Chan means.
Meanwhile, we will establish a tech firm.
Carver industry and to start to op. China's first one <unk> project.
Contributing to energy transition.
And the meeting our duo carbon carbon goes.
We will also deepen reform to strengthen our weak links.
Incentivize all factors tapped potentials and the lead growth by reform, we will further promote integrated risk and internal concho.
And the compliance and manage risks in each S E.
Operations.
All other areas.
And maybe you intensify fundamental capability building.
Involving.
The line.
Work procedures and Skus.
Corporate governance will be further in house to increase transparency.
Recommendation.
By the markets.
And value realization.
Dear friends.
The company is real positioned.
We had the entire industrial chain integrating its advantages and the competitive edge in our risk can show mackie's brands technology and human capital.
So we are confident that we the support from the shareholders and all sectors of the society and to the concerted effort by the board the management team and all stuff.
We can take our all kinds of challenges.
Realize the goal of building a world with a leading company and create more values to our shareholders and to the society.
Thank you.
Thank you Chairman MA now.
We open the floor for Q&A in order to have more interaction.
Appreciate if you could limit your questions to no more than two each time now we will take the first question. Thank you.
Shanghai, Shanghai estrogen Shujaat, even Xi'an, Shanghai, <unk>, Zhang ladies and gentlemen, you may now start the Q&A session.
<unk> like to ask any questions. Please press star one to cancel your questions Press Star two.
Peter Please start taking questions.
At the Hall, B, where you would see Michael Yao.
Washington.
Questioner is now <unk> from Macquarie. Please go ahead.
Hi, Good morning management, Thanks for giving me the chance to ask the first question.
First of all I would like to congratulate management on the much better than expected <unk> results and could you elaborate a little bit more on the rationale behind this.
And on the second is on the dividend and share buybacks.
Let me leave you more on a full year dividend guidance David.
Policy and especially in terms of the share buybacks.
<unk> just mentioned that we will have both HCN HCA share buybacks and we have seen the announcements in Asia could you elaborate more on the details in terms of issue at share buybacks as well. Thank you so much.
When do you like the.
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<unk> do you have confidence that you have on T. The Ecu <unk>.
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Well you know what are you going to empty when you deal with that.
Uh huh.
Thank you very much I'll take the questions.
Yes, sure Tim Glenn will attend heroes Sizzle EUR.
Alicia policies to enhance AP.
Yeah.
<unk> Youll ship.
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Susanna Jens for some time.
Sure.
Yes, your thoughtful adhesion.
In terms of the first question for the rationale behind the first half result.
Sure.
Profit for the first half was 40 44.5 billion and this was the first same period performance.
The reasons are as follows first one is we tap the integrated advantage for the company's operations and specifically for upstream we seize the high oil price opportunity to intensify the fos for exploration and development and we achieved.
Increasing both.
And production effect and we also saw a large jump in the first half performance.
Daniel who has shown truly youll.
Some want us unit homes, Hangzhou <unk> Jonathan <unk>.
Third time Santiago.
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Jonathan <unk>.
Diana.
Doug who is home to me John .
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James Homegrown.
For the refining and marketing segment.
Further deepens the coordination among the business segments and we are closely responded to market change to adjust our utilization as well as <unk>.
Product mix.
And.
In addition to that the price.
Chris in oil also need to gains in inventory.
So we've seen a very good result for the refining business segment.
<unk> are you I know that vehicle types.
Thiago.
As Anja <unk> General harder times, Hey, Mani <unk>.
Hi, Bonnie.
Sure Jamie.
Well chemicals segment, our focus on optimizing the feedstock structure as well as the product slate.
We also have maintained high utilization rate as the very profitable facilities that with US we are able to counter the negative impact of the narrowing margin due to a large increase in the AR.
Procurement and other cost.
For the chemicals segment, we were also able to maintain the stable performance.
Sure.
Mandy <unk>.
Downsizing.
Yeah, John John Goll Ashish.
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John and Daniel mentioned, the adult geyser.
In terms of the outlook.
Outlook for the second half since July we are seeing the decrease in international oil prices as well as fluctuations and the crude the.
The crude premium was also at a high level at.
At the same time, we're also seeing the negative factors such as the slow recovery for downstream demand.
Company has made all out effort to optimize production and operations strengthening the integrated effect and across business segments coordination.
We've seen a major indication indicators kept improving at the same time, we're also strengthened.
Inventory management and cost control and we are able to significantly improve our cash flow position.
Well sure.
So Saddam NOI genre.
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Tim T Shannon Hall.
Good Yeah Lyndon Johnson from Nomura.
Susanna she's field Suzhou playful.
John the answer is yes.
<unk>.
As mentioned just now by me and my colleagues.
We are confident that along with the easing of the pandemic situation and the implementation of the favorable policies by the central government the market demand caps recovery and we are fully confident to achieve a very good result for the whole year.
And then Lynn too so you work from home and team.
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Sure.
Yeah.
Hi, Julien.
He just wants to your second question regarding dividend. The company has always valued returned to our shareholders and to wish to provide high returns for the shareholders through high quality development and increase corporate value at the same time, we will also answer.
Besides continued and sustained dividend to our shareholders.
<unk> of the corporate accretion situation cash flow position development need and return to our shareholders. The board of directors has proposed to distribute an interim dividend of <unk> 61 per share the.
The dividend payout is around 44%.
You're going to lose some money in Tangshan, John Champignon Godaddy is huh.
Hey, equal and school.
Johan.
So India, Colombia later this year.
So retail Gardner shapes.
And that will translate into a annualized dividend yield for Asia and a shares.
Four 8% and 10% respectively capsular calculated on the first half average stock price and this is really this is also a relatively high level.
Hey, Glenn is in.
No problem.
Olson John going too.
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So you want to go long haul you bought the unusual John J D.
As for the whole year dividend guidance the company will make decisions based on the profit.
The whole year performance, the cash flow the future development plan as well as the return to our shareholders.
And Glenn as you know these sangamon T jewelry with Goldman <unk>.
Hi, Bob.
Clinical safety and it's useful time, jugal Nondollar soldier and.
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<unk> launching towards on jobs in Guangxi.
Oh don't play ball Susanne.
And thirdly regarding the question for share buyback.
Based on the principle of keeping relatively high dividend payout to the shareholders.
Annual General shareholders meeting has approved and actually the board of directors has approved a detailed share buyback plan and the company will take.
Relative relatively relevant measures for the share buyback in Asia, and Ishares market when appropriate based on considering the shareholders' interest and as I mentioned just now this would be the first time since the company's IPO and the further illustrate that we bought.
The creating values to our shareholders as well.
Increasing shareholder return thank you.
Sure sure Uhm shy away.
Okay.
Joe Jim John King goes choice helpful. The next question is Joe cellphone from CIBC. Please go ahead.
Madam Muslim you don't go from cooling somehow so seem to have something in Chicago.
In other words have been at your local Wendy's and some targets out.
This is Matt coss or something that's cool.
Okay.
Thank you.
Yes.
Martin.
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What time for to pick up.
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Thanks, Steve.
No.
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How would that be correct.
Yeah.
Questions from <unk>. The first one regarding the company's import Russian oil can the company elaborate on the first half situation as well as they plan for the second half to import Russian oil.
Second question regarding the operations of the facilities there.
There was some safety incidents in the first half for the alarming and Shanghai subsidiaries.
What's the situation now and that's the company and have plan to make further input to upgrade.
Upgrade is the existing old refining and chemical facilities.
And.
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Thank you for the questions I'd like to invite president to answer your question.
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For the first question the company our ranges crudes procurement.
On the principle of utilizing the international market as well as resources and.
Our principle also include to diversify the sources and to diversify the market as well. So we are conducting global sourcing and trading in the first half we our input of Russian oil accounts to really really relatively small portion.
Overall impulse volume.
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<unk> <unk>, when including the usual time 10 to Tycho.
For the second half we'll stick.
Stick to the principle of diversification and based on the commercial principles as well as international trading principles.
In arranging our input will consider the following factors, including the type of cruise.
<unk> freight.
As well as the reliable supply.
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For the second question after the incident at our Shanghai, Petrochemicals and ammonia and petrochemical. The company has organized special task force to coordinate the onside a response emergency plan the equipment installed.
Our installation and restoration of the production and operations currently refining facilities on the part of the chemical facilities.
Back and running now at Shanghai, petrochemical and the ethylene facilities are running at nominal petrochemical. So so far we've seen a limited impact by the incidents.
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Susan.
Yeah.
The company has also draw the lessons learned and we've arranged.
He didn't disaster or potential risks.
Clarification at the facilities and we have also made further inputs in the HFC operation and management system to ensure effective operation of the HFC system. We also strengthened.
Grassroot.
Our fundamental basic work as well as a procedural work hand training.
So we are.
We are making all efforts to make sure the HFC system is operating effectively and efficiently.
Thank you.
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T J from Shanghai secure.
Securities yields. Please go ahead.
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Appreciate it.
<unk> from the Shanghai Securities News first one regarding the oil price.
Chairman just now mentioned the international prices are.
That's a very high level and your fluctuated.
Particularly particularly.
Ever since the Russia, Ukraine conflict depressed.
Is at a historic high so how other companies see the oil price will develop in the future second question regarding the company's new energy business Sinopec is the earliest company the amount of three so he's in China oil companies in China to engage or to <unk>.
I love, the new energy business and his young Shannon petrochemical subsidiary became the first one to receive for your certification for clean hydrogen production.
So the question is how their company.
We will further develop its new energy business, including a.
Batteries swap green hydrogen geothermal and whether the company has <unk>.
Involved or joined the National program to develop the wind and solar.
Production base.
<unk>.
Do you have in tier.
You should see in guar.
With that.
Daryl when T, whether you assume them to Carnival <unk>.
Got it for a long time as soon as soon as in a way that once you acquire D U N T.
Thank you Craig. Thank you for your question I'll take the first one regarding oil price and the second one regarding the new energy and hydrogen I'd like to invite.
Senior Vice President Mr <unk> to take that.
Somebody.
So easy you challenging raw choose who are useful.
Sure.
And Sanjay.
A union shop.
<unk> yeah yeah.
John Knopf for Shandong.
Julia.
Someone yet portion of balloon.
Lord Jones, Yeah, we.
You buy a new bomber may at home.
<unk> no no.
In the first half due to the.
Easing of the pandemic the recovery in demand as well as geopolitical attentions international oil price increased dramatically and fluctuated.
<unk> band.
Flat.
Average price for the first half was $180 a barrel up by 66%.
Sure.
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Oh, John So sure Hi, Johann.
Well soon.
Hi.
You too.
Is July the oil price has dropped significantly and there are many factors behind the oil price movements, including the macroeconomic situation supply and demand inventory geopolitical.
As well as see strengthening or weakening of the U S. Dollars. So there are still lot of uncertainty uncertainties going ahead, and it would be very hard to predict the oil price.
That's really where you're going to.
For these young woman LNG or the other.
Uh huh.
John they use her.
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Yes.
Well, Jonathan Hughes, who obtain you I'm sure you're aware you buy a new semi.
So there'll be somebody who knows.
Hello.
Uh huh.
Arnie Orange.
Our son Nguyen Tien tsin.
So you're good June genre, George Omega made Tom.
Gee I don't have intelligence.
Susan.
So she jugal at home.
Got it.
So those are intelligent home values.
And I have laws.
But some numbers to share with you from the.
Investment banks regarding their forecasts for the oil price.
The average price forecasted by the investment banks for the second half is $103 a barrel for Brent.
The number for next year 2023 is $95 and I believe they also dynamically adjust the numbers no I understand the institutions regularly adjust their forecast for the oil price.
Understood.
Does that mean is here the Guangzhou dual agenda I'll share with me.
So it's horses or the easier intelligence choose you.
Our teams are also addressing the oil price forecasts as well as the operations plan Accordingly. Thank you.
Okay.
Oh sure.
Thiago <unk>.
I'll take the second question now.
That's almost so also even though you'll have one goes.
I saw a man.
Suzanne Zions shield cause I'm, not it's only all proteins.
Sinopec is the energy and the chemical company.
The to develop a new energy is one of the key.
<unk> for energy transformation.
Amazon for that scenario.
<unk> Plaza.
So you shouldn't assume you all day.
Out of the developing new energy approach hydrogen is at the center of the strategy.
There are social and search.
I'm in four months your whole courtyard schindler's higher floods on John's answer your query.
<unk> Shah guidelines on those from glycerol onto social channel plus alcohol.
<unk> judging Julie Lu chance of Shawn Lynch, who don't Julia Ching Tao Xian da <unk>.
Choose your gesture and Georgetown.
Qingdao Heartland.
<unk>.
In terms of the macro planning for hydrogen business. The company has for the improved and they released the sinopec hydrogen development plan for the 14th.
Proteins Lamb period based on the national hydrogen industry development plans from 2021 through 2035, and the guiding thoughts for developing hydrogen of the company, including to develop the hydrogen filling business green hydrogen.
Pilot to drive the development as well as to contributing to the reducing carbon emission and so the key focus areas, including two one is the mobility for clean fuels and the other one is green hydrogen fuel.
Mining and chemical business.
Normally of course, Alan Greer, Mortuaries, <unk> quantity and reorder June quarter, each in Hong Kong.
<unk> children's question Farzana Pinta.
And our target is to be able to China's top hydrogen company with a larger scale.
Leading technology and a first class management, we also seek to build.
The hydrogen innovation platform together with the company's along the hydrogen business change.
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Jim Gooch changes show.
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Realizing the Chennai floods.
Your country I'll show you a PMO question.
So while we are developing the hydrogen business, we will also focus on ensuring.
To develop that step by step.
So as to balance the future development needs as well as the current profitability.
<unk>.
Concerning <unk> Jensen short haul chin she's transactions.
She is our lunch and the <unk> hundred <unk> that are in there that's one thing.
By the end of the first.
First half the company has completed nine facilities for hydrogen.
Verification and the purification capacity has reached.
14000 tonnes per annum.
No matter, what someone in with <unk> onshore bonds essential.
So Sanjay it's yes.
<unk> I wanted to watch in Lahore and Jos.
Could you just answer it.
Shannon John Judge him Donahue.
Thanks Sue.
By end of first half the company has completed construction of eighty-three hydrogen fueling stations and another 13.
In construction.
According to our information.
Sinopec is already the biggest company in terms of.
Great operators and numbers of hydrogen stations.
Sorry for such a scenario from here.
Sorry, if I'm bullish of Guangzhou tens of Onvia.
<unk> Sheng Zhong calling for coupons.
So you're going to you could do your consortia until June but do you have a proposal that sensor.
Sure Joe Hooker, its all about Sean Downes on Joseph concern Shun Jiang.
We all know Lisa Darcis, who were more ashamed chunghwa Youre change order shows will join block some growth.
Three one commercial contract for them.
For other business in the new energy, we are also progressing with the photovoltaic power.
Power generation and.
The program is called 1000 stage.
Stations are programmed and we develop the photovoltaic stations according to locals respective circumstances, including the the Sunshine situation. The government incentive policies and we also develop those stations in to allow.
And with the.
Gasoline outlets as well as the deep <unk>.
Chip charging piling stations by our plan for the 13th five year plan period is to build 7000 photovoltaic power generation stations.
Do you know someone Xinjiang gyros on quantum for Tims us such somebody's Shaw.
Strong gene earlier, so this is al.
For the first half.
We completed the construction of 300 PV power stations and the total installed capacity is 10 megawatts.
So that's why I'm doing Johan <unk> has truly Leah Sergio tone closer.
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For electric charging and battery swap.
So develop this business to further contributes to the Green mobilization Revolution and during for the 13th five year plan period, our plan is to build 5000.
Charging and power batteries.
Battery swap stations in the first half, we completed 200, including 10 batteries well stations.
As you heard associated Ashish.
This would be my answer to the question regarding new business.
Sure you should accelerate.
And we wish you an excellent Morgan Backorder, possibly next questioner is partly from J P. Morgan. Please go ahead.
Thank you Glenn anytime a sham Morgan Datong does he says partially Maui Jim.
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The questions regarding the first one for the inventory effect in the first half the price increase need to inventory gains and kind of company elaborate on day by day effect.
Six segment by segment.
Pacifically.
The refining and marketing segment and also the question is what will be the situation for the second half excluding the inventory effect second question for the cash flow situation. We've seen a decrease in the cash flow and can the company share their reasons are details.
Behind that and also share the second half cash flow outlook.
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Jim.
Yes.
Okay.
For the inventory effect the.
First half both the increase in international oil price as well as the products need to inventory gains and the effect was also a big.
And the reason is that to ensure a stable operation of the companies different business segments, we kept around <unk>.
20 days of processing nice volumes for crude and 15 days.
Refined products for sale its purpose and the total inventory gains effect as we reported in the presentation for the first half was 40 billion RMB.
And by.
If I break down the crude inventory gains was <unk>.
<unk> nine 3 billion and that for products was $10 7 billion and in terms of quarter by quarter effect. The first quarter inventory gains was $19 6 billion in the second quarter was $20 4 billion.
Hello, Tien Tsin Okaloosa video calls until then that should be Daniel D serine champion Thiago.
Now in the high single, who how does he should come from Canada.
And currently our inventory go to evaluate is lower than the crude.
As well as products priced so we believe we are well positioned to counter the risks in the market.
And I'm glad.
When you do the Shanghai Nanjing Tianjin deal.
Oh.
And now I will take the question for the cash flow.
Situation, particularly in the chalk and cash flow in the first half.
Tim Lugo impacting the easy powerful tweet on a consistent theme Horton pension they seem to enjoy the chino in Austria, especially as your E. G. The Peruvian 19 Charlotte's essentials.
As we reported just now the cash flow for the first half is $4 9 billion and that is a net decrease of $43 4 billion.
Do all of the initiatives.
You guys should usually easy to uncle, Sam Jonah Xiaomi into that one Joe the shame on ETF.
The major reasons as follows the first one is in the first quarter we pay.
Paying the taxes deferred by the first buy last year.
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Yeah, Ghansham Hugo Cruz, <unk> chosen not to hang the shingle.
And the second reason is that due to the price increase in commodities internationally, the company's feedstock as well as products price also increased.
The one that you should show who need she seem that you're gonna each in Oklahoma jungle attempting social natural to see a quote unquote margins, yeah, Chile without you consider tongue, 14th annual gene therapy to outdoor.
In addition, due to the different regions pandemic control policies. The company is sales of products were also affected and doesn't need to the.
High increase in the inventory for the company.
Thank you Archie do Eli Uh huh.
And in doing that.
Got all the all that you should see yeah, one be it would be now, Michigan John that drove that.
However, in the second half our cash flow.
I reached $51 7 billion, that's a increase.
The increase of 98.5 versus the first quarter.
I should say to Archie to Appaloosa downtown is headed in the Washington theme that Youll walk trendy as audience I'm, saying don't seem to do with the 18th annual national type of potential.
And that's because of the measures taken by the company, including the coordinated.
The coordination between the business and the finance optimized operations and production as well.
Decrease in the tight apps for the company's inventory and other accounts.
Now ammonia Nicholls as young she wants it and show it sometime during this year glaucoma G. Sheena Shanghai, Xinjiang upheld GTO hydro Guangxi <unk> Neil.
And in the second half, we will continue the stringent management of capital payout and kept our receivables to.
The coordination between the business segments. So again, I should see Joe's, saying 19, saying, yeah, yeah, she called Tango Tango, Julien Shelley Wuxi acuity and payer how closer something that your true.
And it focuses will be reduced to 10 tied up in the inventory as well as accounts receivables.
To accelerate the turnover of the current assets and to improve the efficiency.
Well then you will see she can't Kenyan then you'll have the same dino shaping tcf.
With all these measures we are confident to have a relatively sound kind of accrued cash flow for the whole year.
Thank you.
Since you're using shying away.
Hello English.
Ghansham.
The next question is from UBS. Please go ahead.
Yeah, I'll, let you answer a rollout Robyn <unk> I'm glad you mentioned Dallas, Yeah do you wish you all the bad Bioshock hub will be a population gets homemade quotation of Guangdong.
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Oh sure.
Yeah. The questions from UBS first one regarding the company's announcements on the 12th of August The company announced its intention to delist from the U S stock exchange and can the company share the consideration considerations behind us.
Second one regarding the Capex plan and.
The company has increased.
Increase significant increase planned for the second half versus the first half, but considering the cash flow situation does the company intend to adjust is capex for the second year and the following question is can the company share the capex outlook for the coming years.
Oh.
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Tyler.
The first question will.
I'll invite both secretary and Vice President Mr found to take and the second question will be answered by at present.
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<unk> labs, we should've done yet.
On the 12th of August the company convened a meeting of its board of directors and aren't meeting.
The company's listing on the U S stock has changed situation has been carefully studied and thoroughly analyzed.
Make the decision.
Italy after the board of Directors meeting the company released the announcement too.
The list from the U S stock exchange and the reasons. We're also explained in the announcement.
Pretty sure. It's we offered to you shrunk the call here.
So we are no longer on that.
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The reason for the decision out of commercial considerations and there are mainly two reasons for that the first one is.
The underlying is the small.
Underlying volume of the eight shares.
Your line of shares by the ADR currently is less than 5% in the second consideration is that the law.
Limited trading volume of our underlying H shares in the total the company's total global trading volume.
Living Hugo primarily Guyana trip Com's primary structure.
Neither of us.
Rule of either she PLO cultural tunnel.
And the second aspect is the relatively heavy administrative burden for the company is to list on these.
Stock exchange, including additional disclosure requirements.
Commscope them balk draw Jamie Foxx globally.
I'm pretty sure that holds true.
Susan bulk sure Paul towards withdraw the Gulf Entre.
Yeah.
After the announcement the company will take relatively relative relevant measures in accordance with their regulations and the rules or are there certain exchanges and will also protect the interest of the shareholders. Thank.
Thank you.
Well look with a tier one team.
Siobhan Yeah close.
So we're going to sue.
Due to some bad so I was just there.
My name is Stephen Wheeler.
Yeah, Joe if we can just hope you're well.
Jim do you want to hold them.
I'll take the second question for the second half the company's Capex is 133.34 billion RMB and will also adjust the capex in accordance with the market changes in the future.
Tom.
Corey you kind of show you when you see siblings, who to whom I personally don't Dewey.
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IMT two years ago.
In terms of the Capex breakdown for the first for the M. P segment. The Capex will be 48 declined one 6 billion, mainly it used for crude production capacity in shouldn't they and Tahoe natural gas capacity capacity building in a way.
<unk> trend and tangshan as well as the LNG facilities construction.
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You should see that too.
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No we don't.
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Capex for refining will be $11, four 7 billion, mainly used for the refining structure adjustment at and Ching and Johnson as well as the second phase for Shanghai.
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Gotcha.
Capex for marketing and distribution will be 26, 3 billion, mainly for the construction of gas.
Gas stations integrated entities service stations as well as the logistics construction.
Well again, when you see a lot of equivalent to two so that she is responding to it.
Toyota nine Tianjin and Shijiazhuang.
Archie.
PTA Duchamp tissue.
The capex for chemicals will be 47.89 billion, mainly for the ethylene projects in China in Tianjin Nankai H N high Phase II project and the PTA project at <unk> chemical.
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Capex for corporate and others will be five 2 billion, mainly for the science and technology R&D.
Et cetera.
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You know Sam you go to China.
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Susan.
For the years to come the company will arrange is capex. According to the 13th five year plan period plan and to.
Keep the capex at a reasonable scale.
Focuses will be made to increase the high efficiency exploration and natural gas development for upstream the transformation for our refining business.
High end transformation for chemicals operations as well as the shift to integrated energy service provider in the marketing and.
Distribution segment.
Yeah.
So as your JV with <unk> Xiaomi OTT.
So a whole lot with you Andrew.
Due to time constraints, we would like to invite questions from the last two participants.
Today, Youll see Morgan Stanley the Jetblue to even the next question is Jack from Morgan Stanley . Please go ahead.
Tony Benjamin and congratulations.
Good results.
I am Jack Xu from Morgan Stanley I have two questions. Firstly, what's your view on refined oil product demand in the second half.
Given the weakening of the demand in the first half do you think it is still realistic.
To achieve a low single digit growth in the full year, Tony if I need to.
My second question is on chemicals.
<unk>.
The chemical demand and ethylene to naphtha spread to improve sequentially in the second half. Thank you.
Sure.
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Ladies from Janssen Mcdonald Carin <unk> two <unk>.
Thank you the questions will be taken by the first one for Steve.
The products demand, our senior Vice President Mr. Li will take and the second one regarding chemical is present and he will take time.
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Thank you for the.
Demand for the refined products.
Putting two companies statistics the demand in the first quarter increased but that dropped significantly in the second quarter and the reason is the.
The company's key market in China's east.
East and southern regions, however, in the first quarter or even the first half the pandemic situation became a very severe in those regions and the pandemic control policies lead to slow.
Sluggish sales.
Okay.
Sharp on the industry. So when they tend to go shorter Hong Kong easier courtyard.
When James on Chaucer show so soon.
Siobhan.
Sure.
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However in the second half, we believe along with the easing of the pandemic as well as the implementation of the National policy.
To stabilize economic growth.
Adding to that there's also a national action for.
Well organized and operated market what are the economic will the economic situation will be very positive for the second half.
The rebound to a reasonable band of growth and we are confident the demand for refined products will also pick up.
Okay.
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Yeah.
I will take the second question regarding chemicals in the first half we see we've seen recurrence of the pandemic cases, and also increased Christ in the energy.
Lead to a downstream.
Narrowing demand for our products.
That downstream.
I'm, referring to our downstream customers industrial customers.
So the demand for chemicals for ethylene equivalent actually dropped by 0.1%.
In addition to that we're also seeing the further release of newly built chemical facilities and therefore, we are seeing really.
A big pressure on the product price and the chemicals are also running at difficult environment in terms of profit generation.
Sherman Yoon Shin.
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Sundar, who needed to Oh, so a lot of time to Tobey.
Susan.
In the second half we are continuing to see some challenges, including there will be new facilities.
Up and running and the high oil prices is still likely to maintain so the chemicals margins will continue.
To be under pressure however on the other side. We're also seeing the macroeconomic situation will improve.
The internal demand will pick up and the national policies to stabilize economic growth will be further implemented. Therefore, we expect the chemicals operations will improve and adding to that we also expect there will be increase in the export.
Thank you.
Tricia you assume so all you are with your window.
Uh huh.
The question is from the last participant.
So you have a T. One Joshua Drumm tightened Chin juncture. The last question is John Shaw from John Cai Securities. Please go ahead.
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Yes.
There are two questions. The first one regarding the sinopec marketing there was planned for the companies to for the IPO and the Companys share its latest update and oil.
Is there a timetable for the company.
One regarding the company's newly established carbon industry technology company, what's the strategic positioning for this company and what will be the major businesses for the company.
Susan in the oven.
Your line.
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Okay.
Plans are you going to change.
Some of them yeah bonuses.
Tony could you Moshe.
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Hi, James Jane Jenny O one of your own unit.
Yes.
Sure Tony.
So they don't show up.
New user data.
Jason.
I'll take the second question first for the carbon technology company and the first one will be answered by Forbes Secretary and Vice President Mr. Huang.
For the company in the first half established a carbon technology company and the main reason is to build a specialized operating platform for the company is C. C. U S business and the company will be dedicated to accelerate.
Incubation of a leading technologies as well as its applications. This will help sinopec play a leading role along D. C. C U S value chain and in this industry. The company will also.
This newly established carbon technology company.
Sinopec to manage its carbon assets and to build an ecosystem for the carbon assets and carbon related businesses. So this will eventually help the company's mission to build a green and low carbon development with leading.
Yes.
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<unk> got four trial T cell <unk>.
Thank you very much for your support.
Support and care for the reform and development Sinopec.
Wholly owned subsidiaries.
By Ah in 2018, the Sinopec marketing completed a shareholding structure reform and currently this company is focusing on forging new competitiveness taking.
Taking into consideration of the new market situation and environment.
Focus is our own incentivize development to improve efficiency as well as profit by the company and they their focus is on developing the integrated energy survived the service provider, including the Audiocast.
Electricity hydrogen et cetera.
They are focusing on sharpening their competitive edge currently.
Well I'm injunction and shuttle considered ultra width with Ganji assure Thompson, Paul Chung won the adult jewel.
A considerable elisa.
Our whole shoot on par.
What's your question sure sure sure Vale.
She got bill.
We believe the board of directors of the Sinopec marketing well.
Foot make their plans accordingly in response to a market situation the regulatory requirements as well as future development needs and currently there are no theres no timetable could be announced relating to IPO of sinopec marketing. Thank you.
So is it going to sugary permanent Tanya I'll conclude with a couple of quick conscious hydrocodone with Chicago Guangxu Treasurer.
To achieve a question of when.
When you go through the program once you convert and Julien.
Junior no probably plus additional especially larger.
Thank you again for joining the Sinopec conference call and your long term support for any further inquiries. Please contact our IR I attended.
Thank you very much.
Okay.
Okay.
Yeah.
Yes.