China Petroleum and Chemical Corporation (known as Sinopec; SNP.NYSE, 60028.SH) reported a 23% year-on-year decrease in fourth-quarter 2011 profits, below analyst expectations, from selling diesel and gas at low government-set prices, Bloomberg reported. China raised tariffs on oil products by 7.1% last year, but that increase was outstripped by a 20% rise in oil futures, forcing Sinopec to swallow the difference. The company said it intends to offset losses by increasing crude oil production and developing natural and shale gas repositories. Fu Chengyu, the group’s chairman, has led an effort to diversify away from fuel-making and into foreign oil and gas assets. Sinopec’s crude oil output fell 1.9% last year, but its natural gas output rose 17%. Analysts say Sinopec is looking to achieve a better balance between the upstream and downstream components of its business, like that of Exxon Mobile (XOM.NYSE) and Royal Dutch Shell (RDS.NYSE, RDSA.LSE).