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Sinopec East Gas Transmission into operation to 12 billion cubic meters in operation

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China’s Sinopec on the 29th at the 2009 annual results, announced investment in the construction and operation from the oil country “Eleventh Five-Year Plan” Major Projects East Gas Transmission Project completed and commissioned. Chairman Su Shulin said that oil prices will compress the company’s refining profit margins, the company is also considering to purchase more from the parent company overseas upstream assets.

According to Su Shulin introduction East Gas Transmission Project on August 31, 2007 officially started construction, specifically including the Puguang gas field exploration and development, acid gases, and from Florida to Shanghai, Sichuan provinces and municipalities through eight long-distance pipeline, the total investment 62.676 billion yuan, designed annual production of 4 billion cubic meters of natural gas purification, and purification of natural gas in transportation of 120 billion cubic meters of natural gas in China and later, following a major project. At present the main trunk gas pipeline and three branch has been put into operation successively.

 Su Shulin said at the end of 2009, Sinopec has been accumulated in the Northeast region’s proven natural gas reserves of 451.8 billion cubic meters, control reserves of 464.8 billion cubic meters, forecast reserves of 575 billion cubic meters, three reserves total 1.49 trillion cubic meters. Currently, the main gas field Puguang annual 10.5 billion cubic meters have been completed and mixed natural gas production capacity, according to the scale of the reserves, field development can be stable at least 20 years.

 Su Shulin said oil prices will increase the pressure on refining operations, in addition to compressed margins, would also lead to loss of refining operations at the edge. He expects the price of crude oil this year will be slightly higher than last year, according to the findings of 28 bodies, oil prices will be between 65-95 U.S. dollars per barrel, the average price of 77.09 U.S. dollars per barrel.

 Chief Financial Officer of Sinopec, said Wang Xinhua, the second half of last year, finished oil business began to decline in gross margin, a loss of individual refineries. However, even though oil prices at USD 80 per barrel level, but in the first quarter of the refining business has been profitable, less than 4 U.S. dollars per barrel profit. In addition, he also believes that this year the Government will adjust refined oil pricing mechanism, which will make oil prices more market oriented.

 Su Shulin said Sinopec spent 2.457 billion U.S. dollars in addition to the parent company acquired 18 blocks in Angola, the parent company is also considering to buy more from overseas upstream assets, the source of profits as a measure to expand. In addition, he also said the company does not rule out the direct acquisition of upstream assets abroad may be. Sinopec parent company’s new reserves in overseas projects reached 110 million tons last year, while equity production will increase from last year’s 12.7 million tons this year, 17.2 million tons.

 In addition, Su Shulin also disclosed a total investment of 1.445 billion yuan of the methanol project will be put into operation in 2011, when oil was 50 dollars per barrel when the internal rate of return of the project up to 13%; when oil prices rose to each 80 U.S. dollars a barrel, this project’s internal rate of return will increase to 15%.