State-owned Chinese energy major Sinopec said 2016 net profit jumped 44 percent, its first annual profit rise in three years, as strong demand and better margins in its downstream refining business helped offset low oil prices.
Sinopec –- a listed unit of China Petrochemical Corp –- saw net profit surge to 46.7 billion yuan ($6.8 billion), it said in a statement filed late Sunday to the Hong Kong stock exchange, where it is listed.
Sinopec president Dai Houliang said one reason for the "better-than-expected" results is that "demand for chemicals grew steadily".
While the upstream business was sluggish owing to low international crude oil prices, the downstream refining business improved as domestic demand for refined oil products held steady, and "grew steadily" for chemicals, Dai said.
In a separate statement, Sinopec also forecast profit would increase in the first quarter of 2017.
"Lower crude prices really helped Sinopec's margins last year,"Tian Miao, a Beijing-based analyst at North Square Blue Oak, told Bloomberg News.
"Sinopec may continue to benefit from China’s strong fuel demand growth, especially gasoline. The risk for Sinopec going forward is that crude prices rise too high and too fast as higher upstream margins wouldn't be enough to cover refining losses."
On Monday morning, Sinopec was up 0.65 percent in Hong Kong but down 1.21 percent in Shanghai, where it is also listed.
Another Chinese oil giant CNOOC, which specialises in upstream exploration and development of oil and natural gas, said last week it suffered a 96.85 percent plunge in annual net profit, hit by the low crude prices.
Profit fell to 637 million yuan from 20.25 billion yuan in 2015, the firm said in a statement on Thursday.
CNNOC shares were up 0.32 percent in Hong Kong trading on Monday morning.