Last Year's Revenue of 2.78 Trillion Yuan, What is the "Second Curve" That Sinopec is Creating?

Question AI · How does Sinopec respond to energy transition challenges under the Second Curve strategy?

21st Century Business Herald Reporter Cao Enhui, Shanghai Report

Faced with severe challenges such as international oil price fluctuations and increasing impacts from alternative energy sources, Sinopec (600028.SH) is under some performance pressure for 2025. However, this chemical giant aims to fully launch a “second entrepreneurship” during the “14th Five-Year Plan” period and vigorously explore new profit growth areas.

On March 22, Sinopec released its 2025 annual financial report. During the reporting period, the company achieved operating revenue of approximately 2.78 trillion yuan, down 9.46% year-on-year; net profit attributable to parent company shareholders was 31.809 billion yuan, down 36.78% year-on-year; the company’s operating cash inflow was 1,625 billion yuan, an increase of 131 billion yuan year-on-year, maintaining a sound financial position.

Increasing reserves and production is an important task for China’s oil and gas companies. By 2025, Sinopec will continue to strengthen high-quality exploration and efficient development. According to the report, during the period, the company made major breakthroughs in exploration in the Bohai Bay Basin shale oil, Sichuan Basin new areas, and offshore natural gas, with the Victory Jiyang shale oil national demonstration zone completed with high quality, and shale oil production reaching the million-ton scale. Despite a decline in performance, Sinopec’s oil and gas equivalent production and natural gas industry chain profitability hit record highs in 2025 — last year, the company’s oil and gas production was 525 million barrels of oil equivalent, up 1.9%; natural gas production was 1,456.6 billion cubic feet, up 4%. Additionally, Sinopec processed 250 million tons of crude oil, produced 149 million tons of refined oil, with jet fuel production up 7.3% year-on-year, and total refined oil sales reaching 229 million tons. The annual chemical product sales totaled 87.12 million tons, up 3.6%.

In fact, to adapt to market environment changes, Sinopec has been continuously optimizing and adjusting its refining business in recent years. Specifically, in refining, the company closely follows market trends to optimize unit loads and product structures, promote low-cost “oil conversion” and high-value “oil to specialty,” and orderly advance refining structural adjustment projects, increasing production of jet fuel, lubricants, and other marketable products, with chemical light oil output up 8.4% year-on-year. In chemicals, the company has vigorously reduced costs and expenses to enhance competitiveness. It optimized raw materials, equipment, and product structures, with PX output reaching new highs, and accelerated development of new chemical materials like POE, expanding emerging and niche markets, and actively developing overseas markets.

Notably, to address energy transition, Sinopec has been cultivating its charging and hydrogen energy businesses, aiming to build a comprehensive energy service provider of “oil, gas, hydrogen, electricity, and services.” According to the annual report, Sinopec accelerated the deployment of gas stations and charging/discharging networks, actively promoted hydrogen transportation development, with vehicle LNG sales up 74% year-on-year, charging/discharging volume up 182%, and hydrogen refueling volume significantly increased. LNG refueling and hydrogen business remain leading nationwide.

In the face of complex market conditions, how will Sinopec plan during the “14th Five-Year Plan”? The “Chairman’s Letter” published in the annual report reveals many insights.

Sinopec Chairman Hou Qijun stated, “During the ‘14th Five-Year Plan,’ Sinopec will fully initiate a new journey of high-quality development through secondary entrepreneurship, aiming to accelerate the cultivation of new growth drivers based on existing businesses, vigorously explore new profit spaces, and strive for high-quality, sustainable development.”

To this end, Sinopec is accelerating the construction of a new industrial pattern of “one foundation, two wings, three chains, four new”: energy resources as the foundation, refining and chemicals as the two wings, the three major sales channels of refined oil, natural gas, and chemical products as the traction chain, and new energy, new materials, new formats, and new tracks as new growth poles.

Among them, Sinopec’s “second curve” has attracted much attention. Hou Qijun said the company is focusing on transformation and upgrading, with upstream business accelerating to form a “tripartite” pattern of oil, gas, and new energy. It is promoting quality and efficiency improvements in charging/discharging and hydrogen energy businesses and speeding up the expansion of the “second curve.”

It is worth noting that Sinopec has also made progress in digital intelligence. The company’s “AI+” initiative is steadily implemented, with the Great Wall series large models built and put into use, promoting the deep application of intelligent operation centers, and accelerating the construction of smart factories.

As of press time, Sinopec’s stock price declined, with a total market value of about 720 billion yuan.