Chinese oil giants shift from gasoline to new fuels

Over the past week, China’s state-owned oil companies PetroChina and Sinopec reported sharp profit declines in the first half of the year, driven by falling global oil prices and reduced domestic demand for fossil fuels.

Sinopec posted a 36% drop in net profit in the first half of 2025, stemming from a 59% decline in operating profit in its core refining segment and growing losses in its chemical division.

PetroChina fared somewhat better, as it is less dependent on these segments, but still recorded a 19% year-on-year decline in refining output.

Company executives explained that the fall in demand for gasoline and diesel is linked to the rapid electrification of transport and the expansion of alternative fuels such as natural gas. According to PetroChina CFO Wang Hua, gasoline consumption in the second half of the year will "face considerable pressure."

In response, both PetroChina and Sinopec plan to modernize operations by reallocating resources from traditional fuels to alternative fuels and high-value chemical products. This strategy is aimed at reducing losses in unprofitable segments while expanding the companies’ presence in profitable niches of the energy and chemical industries.

Experts note that China’s refining sector is at a critical turning point: demand for conventional transport fuels has peaked, while the rapid electrification of cars, trucks, and trains makes modernization and innovation essential for survival. Planned changes include expanding the production of specialized chemical products and developing alternative fuel technologies, ensuring the stability and competitiveness of China’s oil refining industry in the coming years.

Meanwhile, the US has imposed new sanctions on Iran’s “shadow fleet” over oil shipments to China.

Overnight on August 28, fires engulfed two of Russia’s largest oil refineries, the Afipsky and Novokuibyshevsky plants, triggering massive blazes at these strategic facilities.