China Petroleum & Chemical Corp. posted a marked earnings decline in 2025 as softer crude prices, weaker fuel demand, and continued pressure in chemicals weighed on results, even as the state-controlled major lifted oil and gas output to a record and maintained an aggressive shareholder return policy. The company reported revenue of RMB2.78 trillion and net profit attributable to shareholders of RMB32.48 billion under IFRS, down 9.5% and 33.6% year over year, respectively, while cash flow from operations rose to RMB162.5 billion. It proposed a final cash dividend of RMB0.112 per share, bringing the full-year payout to RMB0.20 per share.

Chairman Hou Qijun said the earnings drop reflected sharply lower international crude prices and weak chemical margins, but he pointed to stable finances, stronger governance, and continued execution across the portfolio. The company said Brent averaged $69.1 per barrel in 2025, down 14.5% from a year earlier, while China’s demand for refined products fell 4.1%, underscoring the pressure facing integrated downstream players.

Operationally, Sinopec highlighted resilience in upstream. Oil and gas output reached 525.28 million barrels of oil equivalent, up 1.9% year over year, with natural gas production climbing 4.0% to 1,456.6 billion cubic feet. The company said domestic oil and gas equivalent production and profitability across its natural gas value chain both hit record highs, supported by breakthroughs in deep, unconventional, and offshore exploration.

Refining was one of the brighter spots. Sinopec processed 250.33 million tonnes of crude, broadly stable year over year, while light chemical feedstock production rose 8.4% and jet fuel output increased 7.3%. Segment operating profit in refining rose 40.7% to RMB9.45 billion as the company pushed its strategy of shifting more barrels toward chemicals feedstocks and specialty products.

The chemicals business remained the weak link. Segment revenue fell 11.4%, and the division posted an operating loss of RMB14.58 billion as new domestic capacity, lower benchmark oil prices, and softer margins continued to squeeze returns. Sinopec said it is responding by cutting feedstock costs, optimizing product slates, and accelerating higher-value materials, including polyolefin elastomers and carbon fiber.

Marketing and distribution also came under pressure from China’s energy transition. Total oil product sales volume fell 4.3% to 229.02 million tonnes, while segment operating profit dropped 46.5% to RMB9.97 billion. Even so, Sinopec said it retained leading positions in automotive LNG, hydrogen refueling, and low-sulfur bunker fuel, and expanded its alternative mobility footprint to more than 13,000 EV charging and battery swapping stations.

The report lands as China’s major refiners face a structurally tougher fuels market, with EV adoption eroding gasoline and diesel demand while petrochemical overcapacity pressures margins. Sinopec is positioning for that shift by investing in ethylene and aromatics projects in Maoming and Jiujiang, advancing its first 40-million-tonne refining base, and building out what management calls a new growth platform spanning hydrogen, power, new materials, biomass energy, and CCUS. Capital expenditure totaled RMB147.2 billion in 2025 and is planned at RMB131.6 billion to RMB148.6 billion in 2026.

Management framed 2026 as the opening year of its “15th Five-Year Plan” agenda, with priorities centered on energy security, refining and chemicals restructuring, sales network optimization, and development of “four new growth drivers” in new energy, new materials, new business models, and new tracks. The company also said it repurchased both A and H shares for a fourth straight year, signaling continued emphasis on shareholder returns despite weaker earnings.

By Charles Kennedy for Oilprice.com

More Top Reads From Oilprice.com

Oil Markets Brace for Volatility as Trump’s Iran Deadline Fuels Escalation Fears

Oil Inches Higher as Iran Strikes Kuwait’s Mina Al-Ahmadi Refinery

Buyers Scramble for Seaborne Oil as Middle East War Continues

Oilprice Intelligence brings you the signals before they become front-page news. This is the same expert analysis read by veteran traders and political advisors. Get it free, twice a week, and you'll always know why the market is moving before everyone else.

You get the geopolitical intelligence, the hidden inventory data, and the market whispers that move billions - and we'll send you $389 in premium energy intelligence, on us, just for subscribing. Join 400,000+ readers today. Get access immediately by clicking here.