Key facts
- Sinopec Chairman Hou Qijun is implementing a major overhaul of the company.
- The overhaul aims to address dwindling fuel demand, petrochemical overcapacity, and market share challenges.
- Sinopec reported a 19% rise in net profit for the first half of 2026.
- The company plans to invest over 30 billion yuan ($4.46 billion) annually in new energy and materials from 2026 to 2030.
- Hou previously ran PipeChina, consolidating pipeline assets of China's three oil majors.
Sinopec Chairman Hou Qijun is implementing a significant overhaul of the world's largest oil refiner, aiming to address challenges such as declining fuel demand, petrochemical overcapacity, and market share pressures. Appointed a year ago, Hou has restructured the company into four profit centers and emphasized the need to overcome "system and institutional inertia" and "big company syndrome."
Despite facing disruptions from the Iran war and government curbs on passing higher oil prices to consumers, Sinopec reported a 19% increase in net profit for the first half of 2026. Hou acknowledged the declining relevance of gasoline and diesel production due to vehicle electrification, stating the company needs to shift towards chemical materials and new energy sources.
To facilitate this transition, Sinopec plans to allocate approximately 20% of its capital spending, exceeding 30 billion yuan ($4.46 billion) annually, to new energy and new materials between 2026 and 2030. Hou has also set targets for over 30 projects by 2030, including growing reserves, developing shale oil, and producing sustainable aviation fuel. The company faces competition in the petrochemical sector from rivals like Wanhua Chemical and Satellite Chemical, as well as existing overcapacity.
Hou, a geologist by training, has a background at China National Petroleum Corp (CNPC) and previously led PipeChina. Experts note his experience across the energy value chain and potential to leverage government support for challenging investments, though questions remain about Sinopec's ability to compete with non-state actors in the new energy space.