Refining

Sinopec Corp. is China's largest petroleum refiner and oil products producer, with its refining capacity ranking the 3rd in the world. Refineries of the Company are mainly located in China's southeast coastal area, middle and lower reaches of Yangtze River and North China, regions of the most dynamic and most developed economies in the country. They have superior location, convenient transportation, and robust market demand. The Company's major oil products include gasoline, kerosene, diesel, lube oil, chemical light feedstock, fuel oil, solvent oil, petroleum wax, asphalt, petroleum coke, LPG, propylene and benzene.

Refining Configuration

The Company owns a wide spectrum of processing facilities including atmospheric/vacuum distillation, FCC, hydrocracking, delayed coking, catalytic reforming, aromatic separation, hydrofining, alkylation, gas fractionation, asphalt, hydrogen production, desulfurization and sulfur recovery, etc. Some refineries also have solvent deasphalting, solvent dewaxing, wax molding, solvent refining, clay refining and lube oil hydrofining, etc.

Refining Capacity

By end 2009, the company’s total processing capacity reached 210 million tons, up by 12.6% over the previous year. Major production units, including FCC, delayed coking units, catalytic reforming units, hydrocracking units, hydrofining units for gasoline, kerosene and diesel, etc., achieved a certain increase of capacity compared with last year. The Company has pumped more technical support to enhance comprehensive refining capacity and high-sulfur crude processing capacity. In 2009, two integration projects were put into operation. One was in Fujian with capacity of 12 million tpa (including 8 million tpa high-sulfur crude processing capacity). The other one was in Tianjin with capacity of 12.5 million tpa (all processing high-sulfur crude). Incremental comprehensive capacity and incremental high-sulfur crude processing capacity were 15.5 million tpa and 20.5 million tpa. In addition, the Company consecutively finished Zhanjiangdongxing 5 million tpa refining system auxiliary project (incremental capacity 1.5 million tpa) and Shengli Petrochemical products upgrading and processing facilities like extra-low pressure continuous reforming with independent intellectual property. Newly-built wax oil hydrotreating facilities include Luoyang 2.2 million tpa, Anqing 2.2 million tpa, Jinling 2.6 million tpa, Maoming 1.8 million tpa. A series of oil quality upgrading projects were put into operation on time, including S-Zorb facilities in Gaoqiao 1.2 million tpa, Jinan 0.9 million tpa, Guangzhou 1.5 million tpa and Zhenhai 1.5 million tpa, catalytic gasoline hydrotreating facilities in Jinling and Wuhan. Comprehensive auxiliary capacity of refineries will develop towards perfect. Currently, 11 refineries under Sinopec have a capacity of over 10 million ton tpa, including:

Sinopec Zhenhai Refining & Chemical Co., Ltd. (ZRCC) has an overall processing capacity of 20 million tpa and owns a 250,000 dwt terminal. It is Sinopec's major high sulfur and high acidity crude refiner;

Sinopec Shanghai Petrochemical Co., Ltd., with a processing capability of 14 million tpa, owns its indenpendent transportation infrastructures of ocean shipping, wharfs, roads and railways. It is one of the important integrated refining and chemical enterprises under Sinopec;

Sinopec Maoming Company has a crude processing capacity of 13.5 million tpa, with a dedicated single-point mooring system for crude vessels up to 250,000 dwt. It is not only a major refinery to process high sulfur and high acidity crude for the Company, but also an integrated refinery of fuel, chemical feedstock and lubricant;

Sinopec Guangzhou Company, with a processing capability of 13.2 million tpa, is located in the center of the Pearl River Delta and enjoys convenient transportation. It is also one of the important refineries to process imported crude processing;

Sinopec Jinling Company has a processing capacity of 13 million tpa and 77% of the crude is transported through pipelines. It is one of the key refineries for high sulfur and high acidity crude processing;
Sinopec Tianjin Company, with a processing capacity of 12.5 million tpa, is located in Tianjin Binhai New Area. It is an important integrated refinery, processing high sulfur crude.

Sinopec Fujian Refining and Petrochemical Company (FREP) has a processing capacity of 12 million tpa. It is a large petrochemical enterprise jointly invested by Sinopec, Fujian Provincial Government, ExxonMobil and Saudi Aramco;

Sinopec Beijing Yanshan Company, with a processing capability of 11 million tpa, is a refinery for fuel, lube oil and chemical raw material;

Sinopec Shanghai Gaoqiao Company has a processing capacity of 11 million tpa. After revamping project of adjusting to refining crude with high sulfur in 2008, it has become another refinery with ability of processing high sulfur crude under Sinopec. It is a fuel-lubricant-chemical feedstock refinery that manufactures lube oil and petroleum wax;

Sinopec Qilu Company, adjacent to Shengli Oilfield and Qingdao Port, has a processing capacity of 10.5 million tpa. It is also one of the important refineries for high sulfur and high acidity crude processing;

Sinopec Qingdao Refining Corp., Ltd. has an overall processing capacity of 10 million tpa. It is not only a newly-built high sulfur crude processing base, but also the 1st ten-million-ton refining project approved by the central government. It plays a significant role in optimizing refining layout, enhancing competition capability, and safeguarding market supply.

Refining Technologies

Owing to years of self-development on technologies, the Company boasts a strong and experienced team in refining, R&D, engineering and construction. The Company has a series of major refining technologies such as RFCC, Catalytic Reforming, high-pressure hydrocracking, medium-pressure hydrocracking, hydrofining, residue hydrodesulfurization and lube oil hydrotreating and reforming technologies, as well as relevant catalyst development and commercialization capabilities. The company takes the leading position in China in terms of refining technologies. Some of its technologies are up to international advanced level.

Product Quality

In 2009, the Company has maintained the quality of all the ex-work refining products at a 100% on-spec rate. All of its products have qualified the spot check held by technology supervision departments of the State, local governments as well as the Company its own.

Production & Operation

The Company continued to reinforce management as well as scientific and technological advancement. Light oil yield was increased by 0.79 percentage point. Refining yield was increased by 0.48 percentage point. Refining energy-consuming was decreased 2.60 units. Processing loss rate was decreased by 0.10 percentage point all year round.

Summary of Operations of the Refining Segment:

Note1: Crude oil processing volume is converted at 1 ton = 7.35 barrels.
Note2: Data in 2009 include production of Sinopec Qingdao Company for the first time; data in 2008 include 5 enterprises, namely Dongxing, Hangzhou, Yangzhou, Taizhou and Qingjiang; data in 2007 do not include the production of above six.

In 2009, the segment's operating revenue was RMB 23.1 billion, increased by RMB 86.7 billion over the previous year.

Oil Products

Sinopec Corp. is the largest oil products producer and supplier in China. Its major oil products include gasoline, kerosene, diesel, lube oil, chemical light feedstock, fuel oil, solvent oil, petroleum wax, asphalt, petroleum coke, sulfur, LPG, propylene, polypropylene and benzene.

The category and usage of major products are as follows:

Gasoline includes motor vehicle gasoline, motor vehicle ethanol gasoline, Beijing, Shanghai & Guangzhou local-spec gasoline, and gasoline for export. Motor vehicle gasoline grades include RON90, RON93, RON97 and RON98. While meeting domestic demand, the Company also exports some of its gasoline products to countries and regions in Southeast Asia and Middle East, as dedicated gasoline engine fuels.

Diesel, including light diesel, Beijing, Shanghai & Guangzhou local-spec diesel, diesel for military use and diesel for export, varies in such grades as No.5, No.0, No.-10, No.-20 and No.-35. Diesel products are used in many areas such as urban diesel automobiles, agricultural automobiles, railway transportation, waterway transportation, fishing, electric power, agricultural machinery, etc.

3# jet fuel oil complies with the national specification requirements for 3# jet fuel, which is formulated according to US JetA-1, JP-8, UK DERD2494 and IATA's kerosene-type jet turbo fuel quality specification. Aside from meeting the domestic needs, 3# jet fuel oil is also exported to Hong Kong and other regions. Six branches/subsidiaries of Sinopec Corp., namely Sinopec Zhenhai Refining & Chemical Co., Ltd., Sinopec Maoming Company, Sinopec Guangzhou Company, Sinopec Gaoqiao Company, Sinopec Shanghai Petrochemical Co., Ltd. and Sinopec Hainan Petrochemical Co., Ltd., all have proved themselves qualified in the annual quality guarantee inspection held by Hong Kong International Airport.

Lube products, categorized by usage into automotive lube oil, industrial lube oil, synthetic lubricant grease and metal working fluids (MWF), are widely applied to aviation, spaceflight, nuclear industry, electronics, military weapons, shipping, automobile, mechanical processing, metallurgical, refining, chemical, and instrumentation areas, etc. The Company's synthetic lubricant grease takes a leading position in the world. The specialty grease products have been successfully applied to China's Shenzhou-series spaceships and contributed to the successful launch of Shenzhou V, Shenzhou VI and Shenzhou Ⅶ manned-spaceships. The product was recognized by China Aerospace Science and Technology Corporation as the reliable product with stable performance.  As the dedicated oil for China's Antarctic research vessel Snow Dragon, Sinopec Great Wall lube oil has contributed to the success of China's Antarctic scientific research. The Company's various engine oil, hydraulic oil and gear oil were granted certificates from many international companies and rating institutions. Sinopec Great Wall lube oil has become the dedicated lube oil for Beijing 2008 Olympic Games. The Company has established good cooperative relationship with many domestic automobile and motorcycle manufacturers, who use Sinopec Great Wall lube oil as ex-factory fill oil or service fill oil.

Asphalt products include heavy-traffic road asphalt (Class A and Class B, as newly regulated by the Ministry of Communications), modified asphalt, road petroleum asphalt, emulsion asphalt, asphalt used as a protecting coating for piping, asphalt for electric wire, water-proof asphalt, rubber asphalt, asphalt for painting, and insulated asphalt. The past few years witnessed a significant growth of the output of the Company's heavy-traffic road asphalt and modified asphalt which have been widely applied to motorways, urban public roads, airport runways, racing tracks and bridge pavements. After it was successfully applied at the racetrack in Shanghai International Circuit in 2004, Sinopec Donghai modified asphalt was chosen for the road pavement of Donghai Bridge, Shanghai Hongqiao Airport, Beijing Capital Airport Motorway, Yangtze River Tunnel-Bridge and other national key road construction projects. Meanwhile, with the Ministry of Railway, the Company developed emulsified asphalt specialized in railway ballastless track, which has been applied in test section of Wuhan-Guangzhou high-speed railway, Shijiazhuang-Taiyuan railway, Harbin-Dalian railway, Shanghai-Nanjing railway, etc.

Refined Products Sales

Geographical coverage: Sinopec’s major refined products sales market covers all provinces, autonomous regions and municipalities directly under the central government except Taiwan province.

Sinopec Refined Products Marketing Network

The network Mainly Comprises 3 Parts: First, Sinopec subsidiaries——Sinopec Refined Products Sales Company and its 4 major branch companies in main market areas. They have the responsibility to balance distribution, coordinate transportation and supply refined products to sub-branch sales companies and designated customers. Second, the provincial level marketing subsidiaries across the country（including the Hong Kong subsidiary）and their affiliated local branches. Third, Joint ventures Sinopec established with other distributors nationwide and its franchised sales network.
Sinopec marketing subsidiaries owns sound oil storage and transportation facilities. The company’s whole sales distribution centers are linked by pipelines, railways and rivers with some special rail transportation routes, crude jetties, barges as well as railway tanks.

Business Composition

Sinopec’s refined products (gasoline, diesel, kerosene and jet fuel) sales business is mainly comprised of four parts: first, supply to households through a retail network including service stations, oil stores and distribution place in rural areas and on the water. This is the major part for the company’s refined products sales; second, direct delivery to end-users rather service stations; third, direct sales to key large-scale clients; fourth, distribution through wholesale centers (oil depots).

Business Scale

In 2009, Sinopec sold 124.02 million tons of refined products, up 0.85% year on year.

	2009	2008	2007	2009 changes over 2008(%)
Domestic refined products sales（million ton）	124.02	122.98	119.39	0.8
Retail（million ton）	78.90	84.10	76.62	(6.2)
Direct sales（million ton）	25.61	19.63	20.17	30.5
Wholesale（million ton）	19.52	19.25	22.60	1.4
Annual throughput per station （ton／station）	2715	2935	2697	(7.5)
Total number of Sinopec Service Stations	29,698	29279	29062	1.4
COCO stations	29,055	28647	28405	1.4
Franchised stations	643	632	657	1.7

In 2009, the segment's operating revenue was RMB 30.3 billion, decreased by 21.3% over the previous year.