China Petroleum and Chemical Corp (Sinopec Corp) reported a 12.8% fall in 2012 net profit on Sunday, due to a drop in revenues from its upstream and chemicals businesses.

Asia's largest refiner and China's second largest oil and gas company's net profit fell to 63.88 billion yuan ($10.28 billion) from 73.22 billion in 2011, under international accounting standards.

This compared with a consensus forecast of 62.6 billion yuan from 30 analysts polled by Thomson Reuters.

Sinopec, whose parent Sinopec Group has been expanding rapidly overseas via acquisitions, said it should benefit from the Chinese government's action to boost domestic demand and plans to deepen market-oriented reform of the country's oil product pricing system.

"All this will create favourable conditions for the company," Sinopec said in a filing with the Shanghai stock exchange.

Chinese refiners cannot fully pass on higher crude oil costs to customers because of government price controls. This means that any price increases are often too little and too late, leaving refiners with mounting losses.

But Sinopec said refining losses narrowed last year, thanks to a series of increases in domestic oil product prices in response to rises in international crude prices.

Its refining division made an operating loss of 11.95 billion yuan ($1.92 billion) in 2012 under Chinese accounting standards, compared with a loss of 37.6 billion yuan the previous year.

Its refining throughput edged up 1.8% year on year to 221.31 million tons. It aims to refine 238 million tons of crude this year.

Its chemical business made an operating profit of just 367 million yuan last year, versus 25.3 billion yuan a year earlier, due to a sharp fall in chemical product prices as a result of China's economic slowdown.

Sinopec's exploration and production division realised an operating profit of 69.47 billion yuan, down slightly from 71.22 billion yuan in 2011 despite a 4.9% increase in oil and gas output to 427.95 million barrels.

For 2013, the company plans to produce 46.4 million tons of crude oil and 18.1 billion cubic metres of natural gas.

The company did not provide earnings at its various divisions using international accounting standards.