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China Petroleum & Chemical Corporation Announces 2012 Interim Results.

Integrated business model encourages flexibility to overcome market
challenges

Achieving sound operational results despite difficult business
environment

BEIJING, Aug. 26, 2012 /PRNewswire-Asia-FirstCall/ — China
Petroleum & Chemical Corporation (“Sinopec” or “the
Company”)(CH-U600028-centsHKEX-U386-centsNYSE: SNP-centsLSE: SNP)
today announced its interim results for the six months ended 30 June
2012.

Financial Highlights:

* In accordance with the PRC Accounting Standards for Business
Enterprises (“ASBE”), in the first half of 2012, the
Company’s turnover and other operating revenues was RMB1,348.1
billion, up 9.3% over the first half of 2011. Net profit attributable to
shareholders of the Company was RMB23.7 billion. Basic and diluted
earnings per share were RMB0.273 and RMB0.263 respectively.

* In accordance with the International Financial Reporting Standards
(IFRS), in the first half of 2012, the Company’s turnover and other
operating revenues was RMB1,348.1 billion, up 9.3% over the first half
of 2011. Operating profit decreased by 31.4% to RMB40.1 billion. Net
profit attributable to shareholders of the Company was RMB24.5 billion,
basic and diluted earnings per share were RMB0.282 and RMB0.272
respectively.

* The Board of Directors declared an interim dividend of RMB0.1 per
share (tax inclusive).

Business Highlights:

* Exploration and production segment: Sinopec achieved satisfactory
operation performance due to the increased prices and sales volume of
crude oil and natural gas. Crude oil production increased year-on-year
by 4.3% to 163.09 million barrels. Natural gas output grew 14.1% to
289.78 billion cubic feet. The segment’s operating revenue
increased year-on-year by 12.0% to RMB126 billion, and operating profit,
by 16.8% year-on-year to RMB40.5 billion. .

* Refining segment: Refinery throughput was 110 million tonnes in
the first half of the year, representing a year-on-year increase of
1.1%. The segment’s operating revenue rose 7.2% year-on-year to
RMB638.6 billion. Nevertheless, the crude oil price increased
significantly while domestic refined oil product prices were strictly
regulated; hence the segment suffered an operating loss of RMB18.5
billion.

* Marketing and distribution segment: Sinopec adjusted operation
strategies to actively respond to the changing market demand. In the
first half, the total sales volume of oil products increased to 82.67
million tonnes, up by 2.8% year-on-year. The marketing and distribution
segment’s operating revenue increased 8.4% year-on-year to RMB710
billion and its operating profit was up 3.3% from the same period of
2011 to RMB20.3 billion.

* Chemicals segment: Production of ethylene was 4.81 million tonnes
in the first half of 2012, down by 4.1% year on year. The total sales of
chemical products were 26.15 million tonnes, up by 4.2% year on year.
Due to the depressed chemical market and drastic fall in prices of major
chemical products, the chemicals segment recorded operating revenues of
RMB200.8 billion and suffered an operating loss of RMB1.3 billion.

* Total capital expenditure was RMB51.504 billion for the first six
months of 2012.

The first half of 2012 witnessed an economic slow-down in the United
States, the debt crisis and consequent recession in Europe, and slower
growth in China and other emerging markets. The international price of
crude oil rose and then dropped in the first half of 2012. The domestic
market for refined oil products was well supplied; however the price
regulation on domestic refined oil products is tight and is misaligned
with the international crude price. The chemicals market saw intense
competition, leading to a drastic drop in products prices. In the second
half of the year, the Chinese government is expected to implement a
number of fiscal and monetary policies in pursuit of steady economic
growth, driving infrastructure investment and domestic consumer
spending. Given these macro-control policies to be in place in the
second half of 2012, Sinopec expects the domestic demand for refined oil
products and chemicals will steadily increase, which provides favorable
conditions for the Company to scale up business operations.

Mr. Fu Chengyu, Chairman of Sinopec commented, “In the first
half of 2012, the volatile economic environment, both internationally
and domestically, brought challenging operating conditions. That Sinopec
managed to maintain our overall growth momentum is thanks to our
vertically integrated business model and fast response. Looking ahead,
Sinopec will monitor closely the macro-economic situation, improve the
efficiency of our production operations, reinforce production safety,
and ensure effective cost control, in order to maintain a solid
foundation for the sustainable development of our business.”

BUSINESS REVIEW

Exploration and Production Business

Given the geo-political uncertainty and the weakening demand due to
the global economic slow-down, the international price of crude oil rose
and then dropped in the first half of 2012. Brent spot price soared to
US$128 per barrel in the first quarter and dropped below US$100 per
barrel in the second quarter, averaging at US$113.34 per barrel in the
first half, a year-on-year increase of 1.96%.

Sinopec made discoveries in a number of territories, including the
Tahe oil field in the Tarim Basin, the southern Ordos Basin, the western
and northern rims of the Junngar Basin, and the Jiyang depression of the
Shengli oil field. In gas exploration, the Company made new discoveries
in the middle and shallow strata of the western Sichuan Basin, the deep
strata of the Yuanba area in northeastern Sichuan, and the northern
Ordos Basin. In oil field development and production, the Company
achieved sustained oil production growth as a result of the advances in
tapping mature oil fields’ potential, ramping up in key tight oil
reservoirs and improving oil recovery rate. In gas field development,
the key projects were well under way. Sinopec put into operation the
Dawan block of the Puguang Gas Field, achieved good progress in the
Yuanba Gas Field, and progressed smoothly in the middle and shallow
strata of the western Sichuan Basin and the Ordos Basin, as momentum
continued well on track.

Sinopec produced 163.09 million barrels of crude oil in the first
half of 2012, a year-on-year increase of 4.3%. Domestic oil production
increased by 1.2% year-on-year and overseas production increased
significantly by 82.5% compared to the same period last year due to the
overhaul of offshore production facilities in 2011. Natural gas output
grew to 289.78 billion cubic feet, representing an increase of
14.1%.

During the period under review, operating revenues of the segment
were RMB126.1 billion, representing an increase of 12.0% over the same
period of 2011. This was mainly attributable to the increased prices and
sales volume of crude oil and natural gas. The exploration and
production business realized an operating profit of RMB40.5 billion, up
16.8% over the same period of last year.

Exploration and Production: Summary of Operations

Note 1: For domestic production of crude oil, 1 tonne = 7.1 barrels;
for production of crude oil abroad, 1 tonne = 7.27 barrels. Note 2: For
production of natural gas, 1 cubic meter = 35.31 cubic feet.

Refining Business

In spite of the tight price regulation on domestic refined oil
products and the misalignment with the international crude price in the
first half of 2012, we optimized the procurement, transportation and
allocation of crude oil to reduce costs, and maintained steady and safe
operations of refining facilities. We adjusted the refining throughput
and utilization rate in accordance with market changes. We optimized
product slate and increased the output of high-spec gasoline. We
implemented plans to revamp and expand our refineries in an effort to
upgrade the quality of oil products and supply cleaner products.

Refinery throughput was 110 million tonnes in the first half of
2012, representing a year-on-year increase of 1.1%. Light yield
increased by 0.94 percentage point compared with the same period of
2011.

In the first half of 2012, operating revenue of the segment
increased 7.2% to RMB638.6 billion and this was mainly attributable to
the increased sales volume and prices of its refined products. During
the period under review, the crude oil price increased significantly
while domestic refined oil product prices were strictly controlled, and
prices of refining products other than oil products increased slightly,
hence, this segment suffered an operating loss of RMB18.5 billion, which
was RMB6.3 billion more than the same period of 2011.

Refining: Summary of Operations

Note: 1. Refinery throughput is converted at 1 tonne = 7.35
barrels.2. 100% production of joint ventures was included.

Marketing and Distribution Business

In the first half of 2012, Sinopec adjusted operation strategies to
actively respond to the changes in the market demand. In the first
quarter, the Company increased the proportion of retail volume to
achieve higher profitability. In the second quarter, in spite of a
continued drop in international oil price and weakening market demand,
the Company intensified marketing activities and controlled the
inventory level. The Company strengthened quality management for
outsourced oil products. The Company provided value-added services
including e-commerce and promoted non-fuel businesses. In the first
half, the total sales volume of oil products increased to 82.67 million
tonnes, up by 2.8% year-on-year.

In the first half of 2012, the operating revenues of the marketing
and distribution segment increased 8.4% year-on-year to RMB710.0
billion. It was mainly attributed to the improved sales mix (sales of
high-spec gasoline accounted for 99.5% of the total gasoline sales, up
by 1.9 percentage points) and increased sales volume of oil products
through retail and direct channels, (up by 4 percentage points to 89.7%
of the total oil products sales volume). The segment’s operating
profit up 3.3% from the same period of 2011 to RMB20.3 billion.

Marketing and Distribution: Summary of Operations

Chemicals Business

In the first half of 2012, the Company lowered the plant loads for
ethylene and synthetic resin according to supply and demand. We took
advantage of production synergies and optimized supply-chain management,
leveraging lighter hydrocarbon feedstock and increasing resource
efficiency. We produced marketable and high value-added products,
accelerated research and development on new products and performance
compounds for synthetic resin. As a result, synthetic resin new products
and performance compounds reached 52.0%, differentiated fiber reached
67.5% of total produced. We developed a strong customer base by
improving service quality. Production of ethylene was 4.81 million
tonnes in the first half of 2012, down by 4.1% year on year, and the
total sales of chemical products were 26.15 million tonnes, up by 4.2%
year on year.

In the first half of 2012, operating revenues of the chemicals
segment dropped by 4.1% year-on-year to RMB200.8 billion, which was
mainly due to the depressed chemical market and drastic fall in prices
of major chemical products. The segment suffered an operating loss of
RMB1.3 billion.

Summary of Production of Major Chemical Products

Note: 100% production of joint ventures was included

HSE, Energy conservation and Emission Reduction Sinopec implemented
the accountability system and strengthened assessment and supervision on
HSE management to ensure safe and stable operation of the facilities in
the first half of 2012. The Company has taken green and low-carbon
initiatives, advanced technology innovation and energy performance
contracts, and focusing on energy-saving and environmental protection in
the course of energy development, processing and utilization. As part of
the implementation of our corporate social responsibility (CSR) efforts,
the Board of Directors set up the CSR Management Committee to monitor
the Company’s CSR performance in HSE, green and low-carbon
development. In the first half of 2012, the Company’s energy
intensity dropped by 2%, COD in waste water discharge shrank by 4.1% and
sulfur dioxide discharge fell by 3.3%.

Capital Expenditure

Sinopec’s capital expenditures in the first half reached
RMB51.504 billion, of which RMB21.839 billion were used in the
exploration and production segment, mainly for the Shengli shallow water
oilfield, the Tahe oil field in the northwest, the Ordos oil and gas
fields, the Sichuan Basin and the Shandong LNG project. RMB10.427
billion were used in the refining segment, mainly for upgrading the
quality of diesel products and revamping and expansion of refining
projects in Shanghai Petrochemical and Jinling. RMB6.341 billion were
used in the chemicals segment for the construction of projects such as
the Wuhan 800 thousand tpa ethylene project, the Yanshan butyl rubber
project and the Yizheng BDO project. RMB12.39 billion were used in the
marketing and distribution segment, mainly for construction of service
stations, oil depots and oil product pipelines in highways, major cities
and urban development areas, and non-fuel business and IC card
value-added service with 704 new service station added. RMB507 million
were used for the corporate and others, mainly for R&D facilities
and IT projects construction.

BUSINESS PROSPECTS

In the second half of the year, the Chinese government is expected
to implement a number of fiscal and monetary policies in pursuit of
steady economic growth, driving infrastructure investment and domestic
consumer spending. Given these macro-control policies to be in place in
the second half of 2012, the Company expects the domestic demand for
refined oil products and chemicals will steadily increase, which
provides favorable conditions for the Company to scale up business
operations.

In line with the macro economic forecast in the second half of 2012,
we will step-up the market development effort, vigorously optimize
operations, and strengthen HSE, so as to deliver sustained growth.

In exploration, the Company will focus on reserve and volume growth,
advancing exploration in key areas, tracking the evaluation on risk well
drilling, ramping up production in key areas and significant natural gas
projects, strengthening the development, management and enhanced oil
recovery in mature oil fields. The Company will step-up efforts in
exploration and development of unconventional resources, building
production capacity in the Fuling continental shale gas project,
preparing for the coal-bed-methane production in the southern part of
Yanchuan through various pilot well development programs. In the second
half of 2012, the Company plans to produce 163.75 million barrels of
crude oil (including 154.61 million barrels of domestic production and
9.14 million barrels of overseas production), and 293.07 billion cubic
feet of natural gas.

In refining, Sinopec will optimize crude sourcing and allocation,
increase resource efficiency, and rationalize refinery utilization. The
Company will take into consideration a balanced production and sales of
light chemical feedstock, the regional oil products consumption and
profitability, and optimize product slate to produce high-spec gasoline.
The oil products inventory will be controlled at a rational level to
reduce operating cost. The Company will leverage the synergy of
centralized sales of lubricant, asphalt and petroleum coke to maximize
profitability. For the second half of 2012, the Company plans to process
112 million tonnes of crude oil.

In marketing and distribution, Sinopec will leverage our
distribution network and the value of our brand awareness, making
appropriate adjustments to marketing strategies, expanding marketing
activities, extending the sales network, and sharpening competitiveness.
In the meantime, the Company will continuously develop its non-fuel
business, expanding CNG market and developing e-commerce business to tap
new sources of growth. In the second half of 2012, the Company plans to
sell 80 million tonnes of oil products.

In chemicals, Sinopec will respond rapidly to home and overseas
market dynamics and adjust the utilization rate of chemical facilities.
The Company will strengthen plant-site management to continuously
increase its techno-economic index, optimizing feedstock and product
mix, maximizing the output of marketable and high value-added products.
Sinopec will balance marketing with production in line with the market
volatility, taking product inventory under control to sell all that is
produced. The Company will improve its services mechanism for better
customer satisfaction. In the second half of 2012, the Company expects
to produce 4.63 million tonnes of ethylene.

APPENDIX

FINANCIAL DATA AND INDICATORS PREPARED IN ACCORDANCE WITH CHINA
ACCOUNTING STANDARDS FOR BUSINESS ENTERPRISES (“ASBE”)

FINANCIAL INFORMATION EXTRACTED FROM THE FINANCIAL STATEMENTS
PREPARED IN ACCORDANCE WITH INTERNATIONAL FINANCIAL REPORTING STANDARDS
(“IFRS”)

The following table sets forth the operating revenues, operating
expenses and operating profit/(loss) by each segment before elimination
of the inter-segment transactions for the periods indicated, and the
changes between the first half of 2012 and the first half of 2011.

About Sinopec Corp.

Sinopec is one of the largest integrated energy and chemical
companies with upstream, midstream and downstream operations in China.
Its principal operations include: the exploration and production,
pipeline transportation and sales of petroleum and natural gas; the
sales, storage and transportation of petroleum products, petrochemical
products, synthetic fiber, fertilizer and other chemical products;
import & export, as well as import and export agency business of
oil, natural gas, petroleum products, petrochemical and chemical
products, and other commodities and technologies; and research,
development and application of technologies and information.

Adhering to its corporate mission of “Enterprise development,
Contribution to the Country, Shareholder value creation, Social
responsibility and Employee wellbeing”, Sinopec Corp. implements
strategies of resources, markets, integration, internationalization,
differentiation and green low-carbon development with a view to realize
its vision of building a world first class energy and chemical
company.

Disclaimer

This press release includes “forward-looking statements”.
All statements, other than statements of historical facts that address
activities, events or developments that Sinopec Corp. expects or
anticipates will or may occur in the future (including but not limited
to projections, targets, reserve volume, other estimates and business
plans) are forward-looking statements. Sinopec Corp.’s actual
results or developments may differ materially from those indicated by
these forward-looking statements as a result of various factors and
uncertainties, including but not limited to the price fluctuation,
possible changes in actual demand, foreign exchange rate, results of oil
exploration, estimates of oil and gas reserves, market shares,
competition, environmental risks, possible changes to laws, finance and
regulations, conditions of the global economy and financial markets,
political risks, possible delay of projects, government approval of
projects, cost estimates and other factors beyond Sinopec Corp.’s
control. In addition, Sinopec Corp. makes the forward-looking statements
referred to herein as of today and undertakes no obligation to update
these statements.

SOURCE China Petroleum & Chemical Corporation