Sinopec Corp. Announces Record Profits for FY2004 -- YoY Increase of O

    Business Editors

    BEIJING--(BUSINESS WIRE)--March 28, 2005--China Petroleum & Chemical Corporation ("Sinopec Corp." or "the Company") (HKEX:386; NYSE:SNP; LSE:SNP; CH:600028) today announced its financial results for the twelve months ended December 31, 2004.
    "The year 2004 witnessed impressive progress in Sinopec Corp.'s reforms and development. The Company adjusted its operating strategy and carefully organized its production operations. These measures have laid a solid foundation for the Company's sustainable and effective growth. The Company's total production volume, profit and asset efficiency all increased significantly in 2004. All business segments experienced growth, in particular, the Chemical Segment achieved record results. This achievement has made the overall advantage of having an integrated operation more prominent," Chen Tonghai, Sinopec Corp.'s Chairman, commented.
    According to PRC Accounting Rules and Regulations, income from principal operations for 2004 was RMB 590.63 billion (US$71.33 billion), a 41.57% increase from the year before. The Company's net profit was RMB 32.28 billion (US$3.90 billion), representing a 69.77% yoy increase.
    In accordance with International Financial Reporting Standards (IFRS), turnover and other operating revenues for 2004 was RMB 619.78 billion (US$74.85 billion), a 38.04% increase from the year before. Operating profit was RMB 63.07 billion (US$7.62 billion), representing a 62.20% yoy increase. Profit attributable to shareholders reached RMB 36.02 billion (US$4.35 billion), a 60.63% increase compared to 2003. ROCE increased to 12.84% in 2004, representing an increase of 3.83 percentage points.
    The Board of Sinopec Corp. proposed a dividend distribution of RMB 0.12 per share for the full year of 2004. After deducting the interim dividend of RMB 0.04 that has been distributed, the final dividend for the year 2004 will be RMB 0.08 per share, which is equivalent to RMB 8.00 (US$0.97) per American Depositary Share (ADS).

Operating Highlights

Financial Highlights in accordance with the PRC Accounting Rules and Regulations (for the year ended 31 December)

RMB millions ---------------------------------------------------------------------- 2004 2003 2002 ------------------------------------- ------- ----------- ------------ After Before Adjustment Adjustment ------------------------------------- ------- ----------- ------------ Income from principal operations 590,632 417,191 324,184 324,184 ------------------------------------- ------- ----------- ------------ Net profit 32,275 19,011 14,121 14,121 ------------------------------------- ------- ----------- ------------ Earnings per share (RMB) ------------------------------------- ------- ----------- ------------ Fully diluted 0.372 0.219 0.163 0.163 ------------------------------------- ------- ----------- ------------ Weighted average 0.372 0.219 0.163 0.163 ------------------------------------- ------- ----------- ------------ Net cash flow from operating activities per share (RMB) 0.809 0.743 0.693 0.693 ------------------------------------- ------- ----------- ------------ Return on net assets (%) ------------------------------------- ------- ----------- ------------ Fully diluted 17.320 11.667 9.307 9.638 ------------------------------------- ------- ----------- ------------ Weighted average 18.403 12.048 9.478 9.723 ------------------------------------- ------- ----------- ------------ Return (adjusted for non- operating profits/losses) on net assets (%) ------------------------------------- ------- ----------- ------------ Fully diluted 19.316 13.690 9.611 9.953 ------------------------------------- ------- ----------- ------------ Weighted average 20.524 14.137 9.787 10.040 ------------------------------------- ------- ----------- ------------

Financial Highlights (IFRS) (for the year ended 31 December) RMB millions ---------------------------------------------------------------------- 2004 2003 2002 2001 2000 ------------------------------------- ------- ------- ------- -------- Turnover and other operating revenues 619,783 449,001 350,078 326,424 341,576 ------------------------------------- ------- ------- ------- -------- Operating profit 63,069 38,883 29,301 27,311 38,356 ------------------------------------- ------- ------- ------- -------- Profit from ordinary activities before taxation 59,606 35,041 24,916 23,930 33,020 ------------------------------------- ------- ------- ------- -------- Profit attributable to shareholders 36,019 22,424 16,296 15,503 21,732 ------------------------------------- ------- ------- ------- -------- Basic earnings per share (RMB) 0.415 0.259 0.188 0.182 0.302 ------------------------------------- ------- ------- ------- -------- Earnings per share (Based on the total number of shares in issue at year end) (RMB) 0.415 0.259 0.188 0.179 0.259 ------------------------------------- ------- ------- ------- -------- Return on capital employed (%) 12.84 9.01 6.90 6.26 9.90 ------------------------------------- ------- ------- ------- -------- Return on net assets (%) 18.66 13.07 9.77 9.72 15.00 ------------------------------------- ------- ------- ------- -------- Net cash flow from operating activities per share (RMB) 0.797 0.716 0.655 0.663 0.360 ------------------------------------- ------- ------- ------- --------

Operating Profit by Segment (for the year ended 31 December) 2004 2003 --------------------- Changes (%) RMB million ------------------------------------------- ---------- --------------- Exploration and Production ------------------------------------------- ---------- --------------- Operating revenues 85,306 70,262 21.4 ------------------------------------------- ---------- --------------- Operating expenses 59,692 51,102 16.8 ------------------------------------------- ---------- --------------- Operating profit 25,614 19,160 33.7 ------------------------------------------- ---------- --------------- Refining ------------------------------------------- ---------- --------------- Operating revenues 358,273 273,773 30.9 ------------------------------------------- ---------- --------------- Operating expenses 352,330 267,700 31.6 ------------------------------------------- ---------- --------------- Operating profit 5,943 6,073 (2.1) ------------------------------------------- ---------- --------------- Marketing and Distribution ------------------------------------------- ---------- --------------- Operating revenues 346,426 241,360 43.5 ------------------------------------------- ---------- --------------- Operating expenses 331,710 229,417 44.6 ------------------------------------------- ---------- --------------- Operating profit 14,716 11,943 23.2 ------------------------------------------- ---------- --------------- Chemicals ------------------------------------------- ---------- --------------- Operating revenues 144,693 103,840 39.3 ------------------------------------------- ---------- --------------- Operating expenses 125,972 100,297 25.6 ------------------------------------------- ---------- --------------- Operating profit 18,721 3,543 428.4 ------------------------------------------- ---------- --------------- Corporate and others ------------------------------------------- ---------- --------------- Operating revenues 82,224 65,196 26.1 ------------------------------------------- ---------- --------------- Operating expenses 84,149 67,032 25.5 ------------------------------------------- ---------- --------------- Operating profit (1,925) (1,836) 4.8 ------------------------------------------- ---------- ---------------

    Review of Market Environment

    Crude Oil Market

    In 2004, the international crude oil price continued its climb to a higher level, and the price spread between sweet and sour crude oil widened. The Platts Global Brent spot price averaged US$38.27 per barrel, up by 32.73% over 2003. The trend of domestic crude oil prices basically followed the trend in the international market. However, as the increase in international benchmark prices for some of the Company's self-produced oil was not significant, the average realized price of crude oil produced by the Company was RMB 1,956 per tonne (US$33.28 per barrel), up by 20.7% over 2003, the average realized price of natural gas increased by 3.36% to RMB 616 per thousand cubic meters in 2004.

    Refined Oil Products Market

    In 2004, domestic demand for refined oil products surged dramatically as a result of China's rapid economic growth, increase in the number of automobiles and power supply shortage in certain parts of the country. According to the Company's estimation, the nominal domestic consumption of refined oil products (inclusive of gasoline, diesel and kerosene) in 2004 was 157.06 million tonnes, up by 19.0% over the previous year.

    Chemicals Market

    In 2004, China's domestic demand for chemical products continued to grow significantly. The total nominal consumption of synthetic resins, synthetic fibres and synthetic rubber was 48.24 million tonnes, representing an increase of 11% over 2003. Domestic consumption of ethylene equivalent was 16.38 million tonnes, up by 5.8% over 2003. With the gradual recovery of the global chemical industry, the margin of chemical production increased remarkably and price records of most chemical products were repeatedly reached.

    Production and Operation

    Exploration and Production

    In connection with exploration activities, the Company completed a two dimensional seismic study of 31,750 kilometers, a three-dimensional seismic study of 7,030 square kilometers and drilled 590 test wells with a drilling footage of 1,484 kilometers. The proved oil and gas reserves in new exploration blocks in western China increased significantly. A breakthrough was made in southern marine phase sedimentary blocks and remarkable results were attained in terms of exploration in mature blocks and new areas in eastern China. At the end of 2004, the Company's proved reserves of crude oil were 3,267 million barrels and natural gas were 3,033 billion cubic feet, up by 0.31% and 5.04%, respectively, compared with 2003. In terms of development, the Company continually reinforced the comprehensive management of mature oil fields and the development of new blocks in western China. In 2004, the Company drilled 2,365 development wells, with a drilling footage of 5,125.2 kilometers and newly built crude oil and natural gas production capacity were 6.09 million tonnes per year and 1.015 billion cubic meters per year, respectively. In 2004, the Company's production of crude oil and natural gas reached 274.15 million barrels and 207.0 billion cubic feet, respectively, representing an increase of 1.18% and 10.29%, respectively, over 2003. The lifting cost increased from US$6.47 per barrel in 2003 to US$6.72 per barrel in 2004.

Summary of Operations of Exploration and Production Changes from ---------------------------------------------------------------------- 2003 to ------------------------------------------------------------- -------- 2004 2003 2002 2004(%) --------------------------------------------- ------- ------- -------- Crude oil production (mmbbls) 274.15 270.96 269.80 1.18 --------------------------------------------- ------- ------- -------- Natural gas production (bcf) 207.0 187.7 178.8 10.29 --------------------------------------------- ------- ------- -------- Newly added proved reserves of crude oil (mmbbls) 284 208 375 36.54 --------------------------------------------- ------- ------- -------- Newly added proved reserves of natural gas (bcf) 352.0 (254.3) 20.2 N/A --------------------------------------------- ------- ------- -------- Year end proved reserves of crude oil (mmbbls) 3,267 3,257 3,320 0.31 --------------------------------------------- ------- ------- -------- Year end proved reserves of natural gas (bcf) 3,033.0 2,887.6 3,329.4 5.04 --------------------------------------------- ------- ------- -------- Year end proved reserves of crude oil and natural gas (mmboe) 3,773 3,738 3,875 0.94 --------------------------------------------- ------- ------- --------

    Refining

    In 2004, the Company processed 132.95 million tonnes of crude oil, an increase of 14.36% over 2003. The Company actively adjusted its product mix, increased the production of diesel and high value-added products to meet market demands. The Company emphasized market analysis and marketing management and, as a result, both the prices and volume of refined petroleum products sold by this segment have risen. The Company worked to revamp its existing oil refining facilities and improve product quality so that the production of high-grade gasoline amounted to 12.39 million tonnes, up by 34.2% over 2003. In addition, with enhanced management and scientific and technological advancement, all major economic and technical indicators of the Refining Segment were improved. The light products yield reached 74.02%, up by 0.22 percentage points over 2003, and the refining yield reached 93.09%, up by 0.46 percentage points over 2003.
    The trend of domestic refined oil product prices in principle followed the rising trend of international refined oil product prices, however, due to price controls imposed by the government on refined oil products as a result of the macro-economy control measures, the increase in domestic prices was less than that in international prices. The increase in refined oil prices was less than that in crude oil prices. As a result, the refining margin was US$3.86 per barrel, down by US$0.23 per barrel compared with US$4.09 per barrel in 2003, representing a decrease of 5.62%. The refining cash operating cost was US$1.98 per barrel, down by US$0.02 per barrel compared to 2003, representing a decrease of 1.01%. This change was mainly due to continued cost reduction in costs and increased throughput.

Changes From 2003 2004 2003 2002 To 2004 (%) ----------------------------------------- ------- ------- ------------ Crude throughput (mbbls/day) 2,677.2 2,341.0 2,114.6 14.36 ----------------------------------------- ------- ------- ------------ of which:sour crude throughput (mbbls/day) 551.1 478.7 402.8 15.12 ----------------------------------------- ------- ------- ------------ Refining utilization rate (%) 5.63 percentage 93.43 87.8 79.3 points ----------------------------------------- ------- ------- ------------ Gasoline:diesel:and kerosene (million tones) 80.83 68.72 62.42 17.62 ----------------------------------------- ------- ------- ------------ of which:Gasoline(million tones) 23.58 21.74 19.62 8.46 ----------------------------------------- ------- ------- ------------ Diesel (million tones) 50.89 41.67 37.74 22.13 ----------------------------------------- ------- ------- ------------ Kerosene (million tones) 6.36 5.31 5.06 19.77 ----------------------------------------- ------- ------- ------------ Light chemical feedstock (million tones) 17.70 16.46 15.04 7.53 ----------------------------------------- ------- ------- ------------ Light products yield (%) 0.22 percentage 74.02 73.80 73.22 points ----------------------------------------- ------- ------- ------------ Refining yield (%) 0.46 percentage 93.09 92.63 92.50 points ----------------------------------------- ------- ------- ------------

Notes: Crude oil processing volume is converted at 1 tonnes = 7.35 barrels. Except for 2004, the above operation data for 2003 and 2002 do not include those of Xi'an Petrochemical and Tahe Petrochemical.

    Marketing and Distribution

    In 2004, total domestic sales volume of refined oil products reached 94.59 million tonnes, representing an increase of 24.59% over 2003, of which retail volume increased by 37.07% over the previous year. The efficiency of petrol stations continued to improve with the annual throughput per petrol station exceeding 2,000 tonnes, up by 18.80% compared with that in the previous year. The retail sales volume together with direct distribution volume of refined oil products accounted for 77.07% of the total domestic sales volume, up by 5.67 percentage points over 2003. The net increase in the number of company-owned and company-operated (COCO) petrol stations in 2004 was 2,075. In addition, the Company has won the bid to establish 5 petrol stations in the Hong Kong Special Administrative Region to reinforce and improve the construction of its marketing network. The unit segment's cash operating cost of petroleum products (defined as operating expenses less purchasing cost, taxes other than income tax, depreciation and amortization, and divided by the sales volume) was RMB 167.11 per tonne, down by 4.48% compared with 2003. This decrease was primarily due to the effect of increased sales volumes cost reduction.

Summary of Operations of Marketing and Distribution Segment Changes from 2003 2004 2003 2002 To 2004 (%) ------------------------------------------- ------ ------ ------------ Total domestic sales of refined oil products (million tonnes) 94.59 75.92 70.09 24.59 ------------------------------------------- ------ ------ ------------ of which:Retail volume (million tonnes) 53.25 38.85 34.73 37.07 ------------------------------------------- ------ ------ ------------ Direct sales volume (million tonnes) 19.65 15.33 12.63 28.18 ------------------------------------------- ------ ------ ------------ Wholesale volume (million tonnes) 21.69 21.74 22.73 (0.23) ------------------------------------------- ------ ------ ------------ Average annual throughput per petrol station (tonne / station) 2,003 1,686 1,560 18.80 ------------------------------------------- ------ ------ ------------ Total number of petrol stations under SINOPEC brand 30,063 30,242 28,127 (0.59) ------------------------------------------- ------ ------ ------------ of which: Number of COCO petrol stations 26,581 24,506 24,000 8.47 ------------------------------------------- ------ ------ ------------ Number of franchised petrol stations 3,482 5,736 4,127 (39.30) ------------------------------------------- ------ ------ ------------ Retail volume/total domestic sales 5.1 volume (%) percentage 56.3 51.2 49.6 points ------------------------------------------- ------ ------ ------------

    Chemicals

    In 2004, the Company produced 3.637 million tonnes of ethylene, up by 14.77% over 2003. The production of major chemical products, such as synthetic resins, synthetic fibres, monomers and polymers for synthetic fibres and synthetic rubbers, all increased significantly. As a result of the Company's endeavors to improve product mix and increase the production of market-adapted and high value-added products, ratio of performance compound of synthetic resin and differential fibre increased significantly. Furthermore, the Company actively tapped the market and reached its targets for production and sales volumes. In addition, the Company achieved remarkable results in improving the marketing network of acrylic fibre, optimising allocation of resources and customers, improving the quality of customer services and unifying marketing models. This enabled the Company to accumulate valuable experience for the future reform of its chemical marketing system. In 2004, the Company acquired a portion of chemical assets from its parents, Sinopec Group, which added ethylene production of 437,000 tonnes, bringing total ethylene volume to 4.074 million tonnes.

Unit: 1,000 tonnes Changes From 2003 To 2004 2004 2003 2002 (%) ------------------------------------------------ ----- ----- --------- Ethylene 3,637 3,169 2,716 14.77 ------------------------------------------------ ----- ----- --------- Synthetic resins 5,534 4,691 4,005 17.97 ------------------------------------------------ ----- ----- --------- of which: performance compound resins 2,894 2,305 1,847 25.55 ------------------------------------------------ ----- ----- --------- Synthetic rubbers 561 502 458 11.75 ------------------------------------------------ ----- ----- --------- Monomers and polymers for Synthetic fibres 5,049 4,418 3,834 14.28 ------------------------------------------------ ----- ----- --------- Synthetic fibres 1,295 1,280 1,153 1.17 ------------------------------------------------ ----- ----- --------- of which: differential fibres 589 477 402 23.48 ------------------------------------------------ ----- ----- ---------

The operation data for 2002 and 2003 listed above exclude the data for Maoming Ethylene; operation data of 2004 include those of Maoming Ethylene but exclude those of chemical assets acquired from Sinopec Group in 2004.

    Research and Development

    In 2004, the Company proactively developed core technology and proprietary technology for its principal operations and achieved fruitful results with 639 domestic patents and 48 foreign patents being granted. Breakthrough was achieved in exploration in marine phase sedimentary structure in southern China. Additionally, the Company successfully developed technologies to improve the recovery rate in oil fields with complex faultage, flexible and diversified FCC technology (FDFCC), sulfur removal and olefin content reduction technology through selective hydrofining of catalytic gasoline (RIDOS), and 150 thousand tonnes per year three-reactor PET technology. New progress was made in the construction of information systems. ERP system was deployed at 23 entities and its integrated advantage became more prominent. The comprehensive oil field management system and the Ningbo-Shanghai-Nanjing crude oil pipeline transportation and distribution management system were completed and put into operation. Moreover, the application of IC cards at petrol stations achieved remarkable progress with total number of customers exceeding 2 million. Over 10,000 COCO petrol stations have been equipped with IC card facilities and the vision of "One card in hand, fueling nationwide" becomes more accessible.

    Cost Savings

    In 2004, the Company's cost reduction totalled RMB 2.95 billion (US$360 million) which is RMB 451 million (US$54 million) more than the original target of RMB 2.5 billion (US$302 million). The breakdown is as follows: RMB 660 million (US$80 million) from Exploration and Production, RMB 660 million (US$80 million) from Refining, RMB 731 million (US$88 million) from Chemicals and RMB 900 million (US$109 million) from Marketing and Distribution.

    Capital Expenditure

    In 2004, the Company's total capital expenditure was RMB 64.76 billion (US$7.82 billion), of which capital expenditure for Exploration and Production was RMB 21.23 billion (US$2.56 billion). The Company's proved reserves of crude oil increased by 284 million barrels, and natural gas increased by 352 billion cubic feet. Capital expenditure for Refining was RMB 14.27 billion (US$1.72 billion). The newly added primary refining capacity was 8.3 million tonnes/year, the newly added hydro-refining capacity was 4 million tonnes/year, and the newly added delayed coking capacity was 3.9 million tonnes/year. The Ningbo-Shanghai-Nanjing crude oil pipeline was completed and put into operation. Capital expenditure for Marketing and Distribution was RMB16.68 billion (US$2.01 billion), which was principally used for the construction of pipelines for refined oil products and for further optimizing marketing networks for refined oil products by acquiring, building and upgrading petrol stations. As a result, in 2004, the number of COCO petrol stations was up by 2,075. Capital expenditure for Chemicals was RMB 11.03 billion (US$1.33 billion). With the investment, our ethylene capacity was increased by 270,000 tonnes/year, synthetic resin capacity increased by 700,000 tonnes/year, and capacity of monomers and polymers for synthetic fibres increased by 360,000 tonnes/year. The coal gasification projects for chemical fertiliser facilities progressed smoothly. Capital expenditure for Company's Headquarters and Others totalled RMB 1.55 billion (US$187 million), thanks to the construction of information systems achieved new progress. In addition, joint venture projects such as Shanghai Secco progressed smoothly with capital expenditure of RMB 6.5 billion (US$785 million) in total.

    Cooperation with Foreign Partners

    In 2004, the Company's major joint ventures progressed smoothly. The ethylene joint venture with BP in Shanghai has been successfully commissioned and the joint venture with BASF in Nanjing is currently in the commissioning phase. The joint venture with Shell for coal gasification in Hunan province is under construction and estimated to be completed by the end of 2005. The joint venture with ExxonMobil and Saudi Aromco for an integrated oil refining and chemical project in Fujian is under preparation. Joint ventures for the retail distribution of refined oil products with BP and Shell in Jiangsu and Zhejiang, respectively, were formally put into operation.

    Providing Cleaner Fuel For Society

    Since 1 October 2004, the Company started to supply gasoline and diesel which are in compliance with the Euro II standard to the Beijing market. The Company will fully apply the upcoming national standard of gasoline and diesel for motor vehicles (equivalent to Euro II standard), which will be effective from 1 July 2005. According to this standard, sulphur content in gasoline for motor vehicles will be further reduced from 0.08% to 0.05% (m/m), and sulphur content in diesel for motor vehicles will be further reduced from 0.2% to 0.05% (m/m). At the same time, the Company will also supply gasoline and diesel products which are in compliance with the Euro III standard to the Beijing market.

    Business Prospects

    Market Outlook

    In 2005, it is estimated that the global economy will experience stable growth. International crude oil prices will remain high and are expected to fluctuate, and the global chemical industry will still continue its cyclical upturn. China's economy is expected to continue its growth rapidly, which will in turn drive the growth in domestic demand for refined oil products and petrochemical products, creating room for the development of the petroleum and petrochemical industries. Meanwhile, the openness of the domestic retail market for refined oil products and the decrease of import duty for chemical products will give rise to competition in the domestic market.

    Production and Operation

    Exploration and Production

    In 2005, the Company plans to produce 39 million tonnes of crude oil and 6.07 billion cubic meters of natural gas. The Company also intends to increase its production capacity of crude oil by 6.05 million tonnes per year and natural gas by 2.3 billion cubic meters per year.

    Refining

    The projected processing volume of crude oil in 2005 is 143 million tonnes. The Company will strive to increase the production of refined oil products and light chemical feedstock. Optimization of resource allocation, adjustment to structure and improvement of quality will be our main focus in 2005. The Company also proposes to raise production of LPG, propylene, aromatics and high-grade road asphalt. The Company will further increase the major techno-economic indicators of oil refining with targets for light products yield at 74.1% and refining yield at 92.9%.

    Marketing and Distribution

    In 2005, the Company plans to achieve total domestic sales of refined oil products of 102 million tonnes, including retail sales of 57.50 million tonnes and direct distribution of 22.50 million tonnes.

    Chemicals

    In 2005, the Company plans to produce 5.19 million tonnes of ethylene, 7.47 million tonnes of synthetic resins, 0.55 million tonnes of synthetic rubbers, 1.61 million tonnes of synthetic fibre and 6.69 million tonnes of synthetic fibre monomers and polymers.

    Cost Savings

    In 2005, the Company plans to achieve cost savings of RMB 2.5 billion (US$302 million) as follows: Exploration and Production: RMB 600 million (US$72 million); Refining: RMB 600 million (US$72 million); Chemicals: RMB 700 million (US$85 million); and Marketing and Distribution: RMB 600 million (US$72 million).

    Capital Expenditure

    For 2005, the Company planned capital expenditure of RMB 62 billion (US$7.49 billion). The projected expenditure for Exploration and Production is RMB 22.9 billion (US$2.77 billion), Refining is RMB 16.13 billion (US$1.95 billion), Chemicals is RMB 10.37 billion (US$1.25 billion), Marketing and Distribution is RMB 11 billion (US$1.33 billion), and Corporate and Others is RMB 1.6 billion (US$193 million). In 2005, capital expenditure will be engaged in the following areas: In Exploration and Production, the Company will focus on exploiting oil reserves and strive to expand qualified resources, improve the profile of oil and gas reserves and increase production of oil and gas. In Refining, the Company intends to complete the second-phase of the Ningbo-Shanghai-Nanjing crude oil pipeline, construct the crude oil pipeline along the Yangtze River, and speed up the revamping of selected refining projects. In Chemicals, the Company will focus on the revamping and construction of large-scale ethylene, aromatics and PTA facilities and accelerate the coal gasification projects. In Marketing and Distribution, the Company will continue to improve marketing networks, build, acquire and upgrade petrol stations, optimise layout of depots, promote pipeline transportation, improve operating efficiency, and put the southwest refined oil product pipeline into operation during the first half of 2005. Moreover, the Company will speed up the deployment of petrol IC cards to increase marketing level based on information technologies.

    Headcount Reduction

    The company plans to reduce the number of employees by more than 15,000 in 2005 (including downhole operation workers).
    Thanks to the hard work and dedication of the employees, Sinopec Corp. is confident that, in the forthcoming year, the Company will improve its production and operating results, deepen corporate reform, strengthen structural adjustment to realize sustainable and effective development.
    Notice: Sinopec Corp. will announce its 2004 annual results at www.sinopec.com and in major newspapers on Tuesday, 29 March, 2005. An archived webcast to discuss Sinopec Corp's results will be posted on Wednesday, 30 March, 2005 on the Company's website at www.sinopec.com

    About Sinopec Corp.

    Sinopec Corp. is the first Chinese company that has been listed in Hong Kong, New York, London and Shanghai. The Company is an integrated energy and chemical company with upstream, midstream and downstream operations. The principal operations of Sinopec Corp. and its subsidiaries include: exploring, developing, producing and trading crude oil and natural gas; processing crude oil into refined oil products; producing, trading, transporting, distributing and marketing refined oil products; and producing and distributing chemical products. Based on 2004 turnover, Sinopec Corp. is the largest listed company in China. The Company is one of the largest crude oil and petrochemical companies in China and Asia. It is also one of the largest gasoline, diesel and jet fuel and other major chemical products producers and distributors in China and Asia.
    For additional information about Sinopec Corp., please visit the Company's website at www.sinopec.com.cn.

--30--CT/ny*

CONTACT: Sinopec Corp. Investor Inquiries: (8610) 6499 0060 Fax: (8610) 6499 0489 ir@Sinopec.com.cn Media Inquiries: (8610) 6499 0092 Fax: (8610) 6499 0093 media@Sinopec.com.cn

KEYWORD: CHINA INTERNATIONAL ASIA PACIFIC INDUSTRY KEYWORD: OIL/GAS ENERGY CHEMICALS/PLASTICS BANKING EARNINGS SOURCE: Sinopec Corp.

Copyright Business Wire 2005