Sinopec Says It Lost $688 Million on ‘Misjudged’ Oil Prices

(Bloomberg) — Chinese refining giant Sinopec said it will book a 4.65 billion yuan ($688 million) charge on an oil trading loss in 2018 after it misjudged prices.

• The state-owned company revealed the size of the loss at the same time as issuing a profit alert, saying it sees full year net income rising 22 percent to 62.4 billion yuan.

Key Insights

• It’s the first time Sinopec has revealed the size of the loss at its trading unit, known as Unipec, which was first reported in December.
• The loss is not as big as some had speculated. Citigroup Inc (NYSE:). analysts had estimated the hit could be as much as 7.6 billion yuan.
• The losses were incurred as Unipec made mistakes in its hedging business, the company said in a filing. It said previously that losses were unearthed during regular supervision and that independent auditors were looking into the issue.
• Sinopec’s full year net income estimate, which it reported in Chinese accounting standards, is below the 70.3 billion average forecast by 12 analysts compiled by Bloomberg, which uses international standards.

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• Sinopec also reported full-year oil and gas output at 451 million barrels of oil equivalent, of which
  • Crude was 288.51 million barrels
  • reached 977.12 billion cubic feet

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