Core Viewpoint - The article discusses the financial situation of Sinopec, highlighting its significant debt of 1.1 trillion RMB and the challenges it faces in the oil market, while also emphasizing its strategic investments in new energy and materials to adapt to changing market conditions [1][10][16]. Group 1: Financial Situation - Sinopec has a debt of 1.1 trillion RMB, which is primarily a result of "debt financing" to invest in long-term projects such as new refineries and energy facilities [3][10]. - In 2022, Sinopec's refining and chemical sector invested 81.5 billion RMB, a 10% increase from the previous year, indicating ongoing capital expenditures [8]. - The company faces pressure from international oil price fluctuations, with prices soaring above 100 USD per barrel in 2022, impacting its profit margins [6][10]. Group 2: Oil Production and Consumption - In 2023, China's crude oil production was 209 million tons, while consumption reached 773 million tons, necessitating Sinopec to purchase crude oil to meet domestic demand [5][6]. - Sinopec operates one of the largest refining facilities globally, with a refining capacity of 240 million tons in 2022, but this comes with high maintenance costs [8]. Group 3: Taxation and Pricing Mechanism - The domestic oil price is capped when international prices exceed 130 USD per barrel, limiting Sinopec's profit margins and forcing it to cover the difference [10]. - Taxes account for over 40% of the retail price of gasoline, which constrains the extent to which prices can be lowered even when crude oil prices decrease [10]. Group 4: Strategic Initiatives - Sinopec is actively expanding into the new energy sector, with 12.86 million electric vehicles sold in 2024 and a projected market penetration rate increase from 25.6% to 45% over two years [12]. - The company has invested over 10 billion RMB in high-end materials research in 2022, focusing on high-performance polymers and composite materials for various applications, including the electric vehicle market [14].