Sinopec releases H1 2026 data: slight increase in oil and gas, significant production cuts in ethylene and resins

I. Upstream Oil and gaseous Sector Operates Steadily; Domestic Crude Oil development Offsets Overseas Production Decline

The upstream resource end achieved a slight increase. In the first half of 2026, the company's total oil and gaseous equivalent production was 263.48 million barrels, a slight year-on-year increase of 0.3%.

Breaking down by category, total crude oil production was 139.88 million barrels, a slight year-on-year decrease of 0.1%. The production structure showed an increase domestically and a decrease overseas: domestic crude oil production was 127.68 million barrels, a year-on-year increase of 0.7%; overseas sector crude oil production was 12.20 million barrels, a significant year-on-year decline of 8.3%.

Natural gaseous production maintained steady development, with output of 741.57 billion cubic feet in the first half, a year-on-year increase of 0.7%, providing stable support to domestic supply security.

II. Refining Processing Contracts Across the Board; All Refined Oil Product Production Declines in Tandem

Operating rates at downstream refining and chemical sectors were adjusted downward. In the first half of 2026, crude oil processing volume was 113.31 million tons, a year-on-year decrease of 5.6%, driving a simultaneous decline in production across all categories of refined oil items:

· Gasoline production was 30.17 million tons, a year-on-year decrease of 2.0%;

· Diesel production was 23.46 million tons, a year-on-year decline of 3.3%;

· Jet Fuel production was 15.53 million tons, a year-on-year decrease of 4.9%;

· Chemical Light Oil production was 18.71 million tons, a significant year-on-year drop of 15.2%.

The output of all categories of refined oil items and chemical feedstocks contracted compared to the same period last year, and the overall output scale of the refining and chemical end was significantly reduce.

III. Synthetic Chemical Materials Production Significantly Reduced; Ethylene, Resin, and Rubber Show Notable Declines

The chemical new materials sector faced prominent downward pressure, with core synthetic feedstock production generally showing double-digit year-on-year declines:

· Ethylene production in the first half was 6,394 kilotons, a year-on-year decrease of 15.5%;

· Synthetic Resin production was 9,205 kilotons, a year-on-year decline of 16.6%;

· Synthetic Rubber production was 667 kilotons, a year-on-year decrease of 17.0%, representing the largest decline among chemical categories;

· Synthetic Fiber saw a slight retreat, with production of 582 kilotons, a year-on-year decrease of only 3.2%, showing relatively stronger resilience against fluctuations.

Overall, weak downstream chemical demand dragged down the operating rates of ethylene and downstream derivative materials, and the overall output of the synthetic materials sector contracted significantly.

IV. Domestic Refined Oil Sales Decline Significantly; Retail and Distribution Channels Weaken Simultaneously

The domestic refined oil consumption market was under pressure. In the first half, the total sales volume of refined oil items within China was 79.00 million tons, a significant year-on-year decrease of 9.2%. Both retail and direct sales distribution channels shrank simultaneously:

· Retail Channel sales volume was 49.71 million tons, a year-on-year decrease of 8.8%;

· Direct Sales and Distribution Channel sales volume was 29.29 million tons, a year-on-year decline of 9.9%, with manufacturing oil demand falling by a larger margin.

Summary of Overall sector Pattern

In the first half of 2026, Sinopec's operations presented a distinct divergence between upstream and downstream: upstream oil and gaseous achieved slight development relying on stable domestic production, possessing strong counter-cyclical attributes; downstream refining, chemical, and refined oil product sales sectors were affected by weak terminal demand, with processing volumes, product output, and market sales all declining year-on-year across the board. Production cuts to chemical items such as ethylene, synthetic resins, and synthetic rubber exceeded 15%.

Market analysis suggests that weak demand to downstream chemical feedstocks and refined oil consumption is the core reason to the contraction in the refining and chemical sector, while stable upstream oil and gaseous production efficiently offsets the operational pressure brought by the weakening downstream business.