China Petroleum & Chemical Corp (Sinopec), Asia's largest oil refiner, reported a better-than-expected profit rise of 36 per cent year-on-year in the third quarter as it sold more refined oil and petrochemicals products at higher prices.

The company also said yesterday that it will raise its capital expenditure target for this year by 15 per cent to 43.3 billion yuan (US$5.2 billion) to take advantage of higher oil prices by boosting its exploration, production and refining projects in the next quarter.

Sinopec also said it planned to buy South China's largest ethylene production complex for 3.3 billion yuan (US$399 million) in cash from its parent China Petrochemcial Group.

The deal would help Sinopec tap an upturn in the petrochemical margin cycle which is expected to peak in 2005 and 2006.

"The ethylene assets would benefit from this forecasted industry recovery, which would in turn enhance the profitability of Sinopec Corp," the company said in a statement.

The statement said its unaudited net profits in the third-quarter totalled 6.34 billion yuan (US$765 million) against 4.66 billion yuan (US$563 million) in the same quarter a year ago.

The rise in third-quarter earnings was driven by high oil selling prices, with about 48 per cent of its operating profits coming from its exploration and production division, and improved refining margins.

The profits were also driven by strong demand for petroleum product sales, owing to the robust economic growth in China.

For the fourth quarter, Sinopec said it expected prices of oil and refined products would remain at relatively high levels while its chemicals division would continue to recover.

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