China Petroleum Chemical Corporation 1H 2006 Results

China Petroleum & Chemical Corporation 1H 2006 Results Announcement August 28, 2006 Hong Kong Disclaimer This presentation and the presentation materials distributed herewith include forward-looking statements. All statements, other than statements of historical facts, that address activities, events or developments that Sinopec Corp. expects or anticipates will or may occur in the future (including but not limited to projections, targets, estimates and business plans) are forward-looking statements. Sinopec Corp.'s actual results or developments may differ materially from those indicated by these forward-looking statements as a result of various factors and uncertainties, including but not limited to price fluctuations, actual demand, exchange rate fluctuations, exploration and development outcomes, estimates of proven reserves, competition, environmental risks, changes in legal, financial and regulatory frameworks, international economic and financial market conditions, political risks, project delay, project approval, cost estimates and other risks and factors beyond our control. In addition, Sinopec Corp. makes the forward-looking statements referred to herein as of today and undertakes no obligation to update these statements. 2006-8-28 2 Agenda  1H 2006 Financial Highlights  Growth Strategy  1H 2006 Operational Results  2H 2006 Business Prospects 2006-8-28 3 1H 2006 Financial Highlights Profit Growth RMB million Turnover and other operating revenues EBITDA 1H 2006 493,128 50,742 1H 2005 368,454 48,837 Change% 33.84 3.90 EBIT Profit attributable to: Equity shareholders of the Company Minority interests 34,238 33,682 1.65 21,406 158 19,653 2,116 8.92 -92.53 EPS(RMB) 0.247 0.227 8.92 2006-8-28 5 Financial Position RMB million Short-term debt Long-term debt Total equity attributable to equity shareholders of the Company As of 30 June 2006 65,199 68,279 237,159 As of 31 Dec. 2005 40,411 67,059 223,556 RMB million Net cash flow from operating activities Net cash flow from investing activities Net cash flow from financing activities Cash & cash equivalents - beginning balance Cash & cash equivalents - ending balance 2006-8-28 1H 2006 21,478 -54,327 29,050 13,745 9,939 1H 2005 21,082 -31,400 7,553 16,381 13,616 6 ROCE and Dividend ROCE 15% 12.8% 13% 10% 8% 5.5% 5% 3% 0% 2004 2005 1H 2006 12.0% Dividend Per Share RMB Yuan 0.14 0.12 0.10 0.08 0.06 0.04 0.02 0.00 2004 Interim Dividend 2005 1H2006 Final Dividend 7 0.08 0.09 0.04 0.04 0.04 ROCE for 1H 2006 is not annualized 2006-8-28 Growth Strategy Market Environment    Continued high crude prices Cyclical fluctuation in petrochemical industry Chinese economy expected to maintain rapid growth  Domestic demand for oil products and petrochemicals will continue to grow  Increasing competition, along with gradual opening up of markets 2006-8-28 9 Improve Governance and Deepen Reforms  Improve governance practices  Expand roles of Audit Committee, Strategic Committee, Remuneration & Examination Committee, and Independent Directors Enforce internal controls and improve risk management   Deepen management reforms    Integrate management of business units and subsidiaries Empower business units to enhance efficiency Strengthen centralized decision-making process for significant business activities and allocation of resources 2006-8-28 10 Expand Resources    Stabilize mature fields Develop new fields Explore new areas Tarim Basin Chaidamu Basin Songliao Basin Ordos Basin Production Outlook x10,000 tonnes oil equivalent 6000 5000 4000 3000 2000 1000 0 2005 2006-8-28 Sichuan Basin 2006E 2007E 2008E 11 Crude oil Natural gas Puguang Gas Field in Northeast Sichuan  9 bcm per annum of capacity by 2008 12 bcm per annum of capacity by 2010 Maoba Dawan  Puguang Shuangmiao 2006-8-28 12 Expand Markets  Refined oil marketing  Sales Outlook for oil products million tonnes Leverage brand to increase retail and direct sales 140 120 100 80 90% 80% 70% 60%  Chemical products  Leverage centralized marketing to increase direct sales and increase competitiveness Increase direct sales of chemical products to 65% 60 40 20 50% 40% 30% 2005 2006E 2007E 2008E Wholesales Direct Sales Retail Percentage of termical sales,%  0 2006-8-28 13 Align Refining & Chemicals Capacity with Market Demand and Resource Availability Million tonnes Refining Capacity 187.0 156.2 163.1 200 148.9 150 100 50 0 2005 2006E 2007E 2008E Thousand tonnes Ethylene Capacity 5,815 6,015 7,100 8,000 6,000 4,000 2,000 5,395 0 2005 2006-8-28 2006E 2007E 2008E 14 Develop Modern Logistics  By year 2008，90% of crude oil and 40% of oil products shall be transported through pipelines 2006-8-28 15 Improve Assets Value through Innovation  Improve scientific & technological innovation capabilities    Develop proprietary technology Integrate various existing technologies to achieve leading edge Adapt and improve licensed technology  Employ proprietary technology in key areas   Exploration and production of oil and gas Efficient use of resources 2006-8-28 16 Focus on Environment and Conservation    Improve HSE management Conserve energy and protect environment Leverage scientific & technological advances to achieve clean production   Expand recycling and use resources more efficiently Achieve low consumption and low emission 2006-8-28 17 1H 2006 Operational Results Review of Market Environment  China’s GDP grew at 10.9%   Domestic consumption of oil products increased by 7.1% Domestic consumption of petrochemicals (ethylene equivalent) increased by 6.3%  International crude oil prices were high and volatile   Petrochemical prices remained high Refined oil products still subject to price controls 2006-8-28 19 E&P – Operational Summary 1H 2006 Crude oil production (mm bbls) Natural gas production (bcf) Lifting cost (RMB/tonne) Newly added proved reserves of crude oil (mmbbls) Newly added proved reserves of natural gas (bcf) 140.89 126.2 461 143.89 175.5 1H 2005 136.69 104.8 410 85.69 518.1 Change% 3.07 20.42 12.43 67.92 -66.13 30 Jun. 2006 31 Dec. 2005 Change% Proved reserves of crude oil (mm bbls) Proved reserves of natural gas (bcf) Proved reserves of oil and gas (mm boe) 2006-8-28 3,297 3,001.0 3,797 3,294 2,951.7 3,786 0.09 1.67 0.29 20 E&P - Segment Performance Crude Oil and Natural Gas Realized Price Crude Oil RMB/tonne Natural Gas RMB/’000 cubic meter EBIT of E&P Segment RMB million 4,000 3,500 3,000 2,500 2,000 1,500 1,000 500 0 1H 2005 Crude oil 2006-8-28 900 748 660 800 700 600 500 3,310 2,316 400 300 200 100 0 1H 2006 Natural Gas 40,000 35,000 30,000 25,000 20,000 15,000 10,000 5,000 0 1H 2005 1H 2006 21 33,344 17,795 Refining- Operational Summary 1H 2006 Crude Oil Processed (mm tonnes) - Sour Crude Oil Processed (mm tonnes) Gasoline Production (mm tonnes) Diesel Production (mm tonnes) Kerosene Production (mm tonnes) Light Chemical Feedstock Production (mm tonnes) Light Yield (%) Refining Yield (%) 71.68 17.60 11.23 28.32 3.18 11.47 74.81 93.73 1H 2005 68.08 16.87 11.32 26.31 3.39 10.16 74.24 93.11 Change% 5.29 4.33 -0.80 7.64 -6.19 12.89 57bps 62bps 2006-8-28 22 Refining - Segment Performance Refining Margin / Cash Operating Cost Refining Margin (RMB/tonne) Cash Operating Cost (RMB/tonne) EBIT of Refining Segment 150.00 100.00 50.00 0.00 -50.00 -100.00 -150.00 141 117.00 150.00 118.00 100.00 50.00 0.00 -50.00 -93 -100.00 -150.00 RMB million 1,000 -1,000 -3,000 -5,000 -7,000 -9,000 -11,000 -13,000 -15,000 -17,000 -19,000 1H 2005 -16,610 1H 2006 23 -1,296 1H 2005 1H 2006 Refining Margin Cash Operating Cost 2006-8-28 Marketing – Operational Summary 1H 2006 Domestic sales of refined oil products (mm tonnes) Incl. Retail (mm tonnes) Distribution (mm tonnes) 54.32 35.33 9.69 1H 2005 50.77 29.56 10.39 Change% 6.99 19.52 -6.74 Total gas stations Incl. Self-operated stations Franchised stations Annual average throughput of self-operated stations (tonnes/station) 29,198 27,628 1,570 2,558 30,352 26,870 3,482 2,200 -3.80 2.82 -54.91 16.27 2006-8-28 24 Marketing - Segment Performance RON #90 Gasoline Guidance Price RMB/Tonne 6000 5000 4000 3000 2000 Jan Mar 2003 May 2004 Jul Sep 2005 Nov 2006 EBIT of Marketing Segment RMB million 12,000 10,000 8,000 6,000 4,000 2,000 0 1H 2005 1H 2006 6,643 10,761 #0 Diesel Guidance Price RMB/Tonne 6000 5000 4000 3000 2000 Jan 2006-8-28 RMB/tonne 1H2005 149.93 1H2006 149.75 25 Mar 2003 May 2004 Jul Sep 2005 Nov 2006 Marketing cash operating cost Chemicals — Operational Summary Unit: 1,000 tonnes Ethylene Synthetic resin 1H 2006 3,031 4184 1H 2005 2,434 3,528 Change% 24.53 18.59 Monomers & polymers for synthetic fibers Synthetic fiber Synthetic rubber Urea 100% production from YPC-BASF and Shanghai-Secco was included. 3577 770 318 3,152 756 308 13.48 1.85 3.25 906 998 -9.22 2006-8-28 26 Chemicals - Segment Performance Chemicals Price Spread (1990 - Jul. 2006) USD/tonne 1200 EBIT of Chemicals Segment RMB million 12,000 10,000 10,815 1000 8,000 800 7,198 6,000 4,000 2,000 LDPE-Naphtha PP-Naphtha 600 400 200 0 1H 2005 Jan-2005 1H 2006 0 Jan-1990 Jan-1993 Jan-1996 Jan-1999 Jan-2002 RMB/tonne Ethylene cash operating cost 1H2005 1,236 1H2006 1,262 27 2006-8-28 Cost Saving 1H2006 Cost Saving RMB million 3,000 2500 2,500 2,000 1,500 1,000 500 0 2006 plan E&P Refining Marketing 1H2006 Actual Chemicals 1382 2006-8-28 28 Capital Expenditure 1H2006 Capex RMB million 80,000 70,000 70,000 60,000 50,000 40,000 30,000 20,000 10,000 0 2006 Plan E&P Marketing Corporate & Others 1H 2006 Actual Refining Chemicals    30,452  Exploration and Production: RMB 11.68 billion. Newly built production capacity of crude oil and natural gas was 2.95 million tonnes per year and 758 million cubic meters per year respectively Refining: RMB 5.12 billion. Construction of the Yizheng-Changling crude oil pipeline completed; the refinery revamping projects in Guangzhou, Yanshan and Qingdao progressed smoothly Marketing and Distribution: RMB 6.68 billion. Construction and acquisition of gas stations in key areas continued with 353 newly added stations Chemicals: RMB 5.93 billion. Maoming ethylene expansion project, ethylene projects of Fujian and Tianjin as well as other projects such as synthetic fiber materials, synthetic rubber, and the fertilizer facilities revamping projects were proceeding on schedule. 29 2006-8-28 2H 2006 Business Prospects Market Environment  China’s economy is expected to maintain its rapid growth  Demand for oil products and petrochemicals will increase steadily  International crude oil prices and chemical prices will remain high Refining business will remain under pressure Intensified market competition in domestic refined oil products (WTO – opening of wholesale end 2006)   2006-8-28 31 E&P    Increase oil & gas production Add capacity in promising areas Accelerate preparation for Puguang Gas Field development 2H Plan Crude oil production (mm tonnes) Natural gas production (bcm) 20.16 3.5 FY2006 40.00 7.07 2006-8-28 32 Refining    Diversify crude sourcing to reduce purchasing cost Proactively adjust product mix Improve throughput of high value-added products 2H Plan FY2006 Crude throughput (mm tonnes) 73.30 144.98 2006-8-28 33 Marketing  Closely track market trends and align marketing strategy accordingly Optimize resource allocation to maintain market position Strengthen management and optimize marketing structure 2H Plan FY2006 110.32   Total domestic sales of refined oil products (mm tonnes) 56.00 2006-8-28 34 Chemicals  Ensure safe and stable operations, and smooth start-up of new facilities Optimize product mix, increase production of profitable and high-demand products Leverage functions of chemical sales company 2H Plan FY2006 6.06   Ethylene production (mm tonnes) 3.03 2006-8-28 35 Conclusion  Continue policy of ―Reform, Restructuring, Innovation and Development ‖ Achieve 2006 production and operations targets Maintain sound performance   2006-8-28 36 For Further Information http://www.sinopec.com Investor Relations Beijing: Tel: (8610) 64990060 Fax: (8610) 64990489 Email: ir@sinopec.com Media Relations Tel: (8610) 64990092 Fax: (8610) 64990093 Email: media@sinopec.com Hong Kong: Tel: (852) 28242638 Fax: (852) 28243669 Email: ir@sinopechk.com New York: 2006-8-28 Tel: (212) 759 5085 Fax: (212) 759 6882 Email: fangzq@sinopecusa.com 37