Sinopec Shifts Focus from Fuel Sales Amid China's Electric Vehicle Boom

China's state-held Sinopec is shifting its focus from traditional fuel sales to new energy and chemicals as domestic demand for refined oil products continues to decline.

The world's largest oil refiner, officially known as China Petroleum & Chemical Corporation, reported a net profit increase for the first half of 2026 but cited falling fuel sales as a major challenge.

Sinopec Chairman Hou Qijun acknowledged that the company needs to transform its business model to adapt to the changing market. 'As the company grows in scale, its ability to respond to market changes becomes inadequate,' he wrote in a magazine article.

Domestic fuel sales have been declining for two years, with gasoline and diesel consumption dropping by 7.9% and 11.5%, respectively, year-on-year. The decline is attributed to the high oil prices dampening demand and accelerated substitution by new energy sources.

To address this challenge, Sinopec plans to allocate more capital to new energy and chemicals by the end of the decade. This includes developing shale oil fields and sustainable aviation fuels, as well as reducing refining costs.