About China Petroleum & Chemical

China Petroleum & Chemical Corporation operates as an energy and chemical company. The company is a subsidiary of China Petrochemical Corporation. The company’s principal businesses include exploration for, development, production and marketing of crude oil and natural gas; refining of crude oil and marketing and distribution of refined oil products, including transportation, storage, trading, import and export of petroleum products; production and sales of petrochemical products; the operation in relation to hydrogen, the production, storage, transportation and sales of hydrogen, production and sales of hydrogen production, hydrogen refueling and hydrogen storage facilities and other hydrogen energy business and related services; and power supply business, vehicle battery charging and swapping, solar energy, wind energy and other new energy power generation, operation of new energy vehicle charging facilities, battery sales, sales of new energy vehicle battery swap facilities and other electric energy businesses and related services. On October 29, 2015, the company entered into a joint venture agreement with Sinopec Assets Management Co., Ltd. (‘SAMC’), a wholly-owned subsidiary of China Petrochemical Corporation, in relation to the formation of Sinopec Shanghai Gaoqiao Petrochemical Co., Ltd. (‘Gaoqiao’). The company and SAMC subscribed for 55% and 45% of the registered capital of Gaoqiao, respectively, and Gaoqiao became a subsidiary of the company. In July 2020, the company and certain of the company’s subsidiaries entered into transactions with PipeChina to sell the ownership of certain oil and gas pipeline assets and other facilities to PipeChina in exchange for approximately 14% of registered capital of, and cash paid by, PipeChina as consideration (the ‘Pipeline Transactions’). The Pipeline Transactions closed on September 30, 2020. In accordance with the arrangements of the Pipeline Transactions, the company and PipeChina have entered into agreements for the continuous use of relevant oil and gas pipelines and other facilities in the future on the terms and subject to conditions set forth therein. Exploration and Production The company explores for, develops and produces crude oil and natural gas in a number of areas in China and overseas. As of December 31, 2022, the company held 351 production licenses in China, with an aggregate acreage of 38,937 square kilometers and with terms ranging from 10 to 80 years. As of December 31, 2022, the company held 188 exploration licenses in China for various blocks in which the company engaged in exploration activities, with an aggregate acreage of approximately 370 thousand square kilometers. As of December 31, 2022, the company’s overseas subsidiary held one production license, with an acreage of 322.57 square kilometers. It does not have exploration licenses. The company’s overseas equity-accounted investments held 74 production licenses, with an aggregate acreage of 5,357.2 square kilometers, and no exploration license. Properties The company operates 251 oil and gas producing fields and blocks. Shengli production field is the company’s most important crude oil production field. It consists of 76 producing blocks of various sizes extending over an area of 2,597 square kilometers in northern Shandong Province, all of which are the company’s net developed acreage. Most of Shengli’s blocks are located in the Jiyang through with various oil producing layers. In 2022, Shengli production field produced approximately 166 million barrels of crude oil and 28.35 billion cubic feet of natural gas, with an average daily production of 468.17 thousand BOE. As of December 31, 2022, the total acreage of the company’s oil and gas producing fields and blocks in China was 17,633 square kilometers, including 10,420 square kilometers of developed acreage, all of which were net developed acreage; and 7,213 square kilometers of gross undeveloped acreage, all of which were net undeveloped acreage. As of December 31, 2022, the total acreage of the company’s oil and gas producing fields and blocks of the company’s overseas subsidiary was 322.57 square kilometers, including 234.71 square kilometers of developed acreage, of which 234.71 square kilometers were net developed acreage; and 87.86 square kilometers of gross undeveloped acreage, of which 87.86 square kilometers were net undeveloped acreage. As of December 31, 2022, the total acreage of the company’s oil and gas producing fields and blocks of the company’s overseas equity-accounted investments was 1,675.4 square kilometers, including 1,675.4 square kilometers of developed acreage, of which 1,675.4 square kilometers were net developed acreage; and none was gross undeveloped acreage. Refining In 2022, the company’s refinery throughputs were approximately 242.27 million tonnes. The company produces a full range of refined oil products. Gasoline and diesel are the company’s largest revenue-generating products, and are sold mostly through Sinopec Marketing Co., Ltd., the company’s subsidiary, through both wholesale and retail channels. The company uses most of its production of chemical feedstock as feedstock for the company’s own chemical operations. Most of the company’s other refined oil products are sold in China to a wide variety of industrial and agricultural customers, and a small amount is exported. Refining Facilities The company operates 29 refineries in China. As of December 31, 2022, the company’s comprehensive processing capacity of oil refining was 287.25 million tonnes per annum. In 2022, the company’s gasoline yield was 24.37%, diesel yield was 26.04%, kerosene yield was 7.43%, and light chemical feedstock yield was 17.60%. For the year ended December 31, 2022, the company’s overall yield for all refined oil products at its refineries was 94.96%. Marketing of Refined Oil Products The company operates the largest sales and distribution network for refined oil products in China. In 2022, the company distributed and sold approximately 162.55 million tonnes of gasoline, diesel and kerosene domestically. Most of the refined oil products sold by the company are produced internally. In 2022, approximately 72.61% of gasoline sold by the company and approximately 79.41% of diesel sold by the company were produced internally. Retail All of the company’s retail sales are made through a network of service stations and petroleum shops operated under the Sinopec brand. Through this unified network, the company is able to implement consistent pricing policies, maintain both product and service quality standards and more efficiently deploy the company’s retail network. In 2022, the company sold approximately 106.91 million tonnes of gasoline, diesel and kerosene through the company’s retail network, representing approximately 65.77% of the company’s total domestic gasoline, diesel, jet fuel and kerosene sales volume. The company’s retail network mainly consists of service stations that are wholly-owned and operated by the company, and jointly-owned and generally operated or leased by the company, all of which are operated under the Sinopec brand. Wholesale and Distribution In 2022, the company sold approximately 55.65 million tonnes of refined oil products, including 12.75 million tonnes of gasoline, 32.33 million tonnes of diesel and 10.57 million tonnes of kerosene, through wholesale and distribution to independent distributors, such as domestic industrial enterprises, hotels, restaurants and agricultural producers and long-term large-scale end users, such as railways, airlines, shipping and public utilities. The company operates 318 storage facilities with a total capacity of approximately 18.62 million cubic meters, substantially all of which are wholly-owned by the company. These storage facilities and its wholesale centers are connected to the company’s refineries by railway, waterway and pipelines. The company also owns some dedicated railways, oil wharfs and oil barges, as well as a number of rail tankers and oil trucks. Chemicals The company is the largest petrochemicals producer and distributor in China, with the company’s petrochemical production plants located in economically developed regions, such as central, eastern and southern China. The company produces and distributes a full range of chemical products, including intermediate petrochemicals, synthetic resins, synthetic fiber monomer and polymers, synthetic fibers and synthetic rubber. Intermediate petrochemicals, synthetic resins, synthetic fibers, and synthetic rubber comprise a significant majority of the company’s external sales. Synthetic fiber monomer and polymers and intermediate petrochemicals, on the other hand, are partially internally consumed as feedstock for the production of other chemical products. The company’s chemical operations are integrated upstream and downstream with its refining businesses, which supply a significant portion of the company’s naphtha and light hydrocarbons feedstock. Due to the high demand in China, the company sells most of its chemical products in China. Products Intermediate Petrochemicals The company is the largest ethylene producer in China. The company’s rated ethylene capacity as of December 31, 2022 was 14.75 million tonnes per annum. In 2022, the company produced 13.44 million tonnes of ethylene. Nearly all of the company’s olefins production is used as feedstock for the company’s petrochemical operations. The company produces aromatics mainly in the forms of benzene and para-xylene, which are used primarily as feedstock for purified terephthalic acid, or PTA, the preferred raw material for polyester. Chemicals extracted from olefins and aromatics are mainly used to produce synthetic resins, synthetic rubber and synthetic fibers, as well as intermediate petrochemicals. Synthetic Fiber Monomers and Polymers The company’s principal synthetic fiber monomers and polymers are purified terephthalic acid, ethylene glycol, acrylonitrile, caprolactam, polyester, polyethylene glycol and polyamide fiber. Synthetic Fibers The company’s principal synthetic fiber products are polyester fiber and acrylic fiber. Synthetic Rubbers The company is the largest manufacturer of synthetic rubbers in China. The company’s principal synthetic rubbers products are cis-polybutadiene rubber, styrene butadiene rubber (SBR), styreneic block copolymers (SBCs) thermoplastic elastomer, isobutadiene isoprene rubber, or IIR (brominated IIR included), and ethylene propylene rubber. Marketing and Sales of Petrochemicals The central, eastern and southern regions in China, where most of the company’s petrochemical plants are located, constitute the major petrochemical market in China. The company’s principal sales channels consist of direct sales to domestic and foreign large- and medium-sized manufacturing enterprises, which account for more than 74.6% of the company’s direct sales; sales to distributors, who are responsible for sales and distribution to a portion of the company’s smaller and scattered customers or specific customers; and sales of chemical products through the company’s e-commerce platform ‘Chem E-Mall,’ which effectively launched an e-commerce channel of petrochemical products and improved customer experience. Patents and Trademarks In 2022, the company was granted 6,289 patents in China and overseas. As of December 31, 2022, the company owned a total of 49,852 patents in China and overseas. In 2022, the company had 45 PRC material trademarks and 11 overseas material trademarks approved internally. Regulatory Matters To operate business in China, the company and all of its PRC subsidiaries are required to register with the State Administration of Market Regulation and obtain a business license with the scope of the company’s/its business set forth therein, and obtain approvals and permits from relevant government authorities for certain specialized business activities. Research and Development The company’s expenditures for research and development were RMB22.5 billion in 2022, among which the research expenses were RMB12.8 billion for 2022. History China Petroleum & Chemical Corporation was founded in 2000 under the Company Law of the People’s Republic of China. The company was incorporated in 2000.