China's oil giants are reaping windfall profits, drawing strength from strong domestic demand for refined oil and chemical products.

PetroChina, the country's biggest oil producer by output, raked in 140 billion yuan ($21.5 billion) in net profits last year, rising 35.6 percent from a year ago.

The offshore oil explorer CNOOC shined as well. Its net profits surged 84.5 percent year on year to reach 54.41 billion yuan ($8.4 billion) in 2010. The crude futures prices in London averaged $79.47 a barrel in 2010, up 29.2 percent from a year earlier.

Compared with their upstream-focused peers, performance of the oil refiner Sinopec was less bright as rising crude prices made a dent to its refining division. The company earned net profits of 70.71 billion yuan ($10.9 billion) last year, up 12.8 percent from 2009.

Sinopec relied on imports to meet 78 percent of its needs for crude oil, but the refiner is less able to pass the costs pressure to consumers.

Under the current fuel pricing regime, policymakers consider price adjustments when the moving average of international crude oil prices changes more than 4 percent over a period of 22 consecutive working days. In its lastest move, the National Development and Reform Commission on April 7 raised the domestic wholesale prices of gasoline and diesel by 500 yuan ($76) and 400 yuan ($61) per ton, respectively.

However, last year's retail price increase was much smaller than the surge in crude prices as the government worried about inflation.

Sinopec said that its future sustainable development will depend partly on further discoveries or acquisitions of oil and natural gas resources.

The company plans to invest 54.3 billion yuan ($8.3 billion) in the exploration and development sector in 2011, accounting for 43.8 percent of its total capital expenditure.