China's second biggest oil firm has reported an 18% fall in 2001 profits, due to a mix of falling oil prices, the global economic slowdown and the "disorderly" domestic market.

Sinopec's net profits fell to 16bn yuan (�1.3bn; $1.9bn), compared with 19.6bn in 2000.

During 2001, Sinopec raised $1.4bn when it staged what was - at that time - China's biggest-ever stock market listing.

Sinopec streamlined itself by shedding 68,000 jobs last year. As a result, it said it hoped to save 1.5bn yuan on labour costs this year.

Regional advantage

The bulk of Sinopec's oil fields are scattered around southern and eastern China so, unlike rival PetroChina, it has been spared the protests by crowds of up to 50,000 unemployed Manchurian oil workers over the last month.

But hiccups in the China's transition to a market economy have hurt profits.

Mr Li said China's "immature pricing mechanism" and "disorderly competition" caused an oversupply of of refined oil products in the home market.

Sinopec has an agreement with UK oil major BP Amoco to open a chain of petrol stations this year.

US investment bank Goldman Sachs warned Sinopec's downstream and marketing operations had disappointed and said it would be "closely monitoring business performance and the restructuring process".

Operating revenue in 2001 was 318.5bn yuan, down 13bn yuan on the previous year.