CNPC arm shrugs off oil curbs

PUBLISHED : Saturday, 04 April, 1998, 12:00am
UPDATED : Saturday, 04 April, 1998, 12:00am


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CNPC (Hong Kong) should not be affected by its mainland parent's move to cut crude oil production by about 5 per cent, Guo Zeguang, the vice-president of its Hong Kong parent CNPC Hong Kong (Holdings), said.

Mr Guo said the listed company's projects in Liaohe and Karamay, which were included in its plans to cut production, were relatively independent from the remainder of its parent's oilfields.

Mr Guo also said the Hong Kong-listed arm might move into downstream operations following the asset swap between its Beijing-based parent China National Petroleum Corp (CNPC) and China Petrochemical Corp (Sinopec).

He said: 'The restructuring should bode well for the listed company, giving it a bigger scope for investments.' CNPC, which has a virtual monopoly of the mainland's on-shore oil exploration and development, is to become a fully-integrated oil company under the asset swap plan.

It has decided to reduce its crude oil production in line with other producers around the world to maintain a steady oil price.

An official said the company cut production by about 561,000 tonnes of oil from oilfields such as Daqing, Shengli and Liaohe in the two months to March.

Following an Opec-led deal on production control last month, CNPC further slashed production by about 22,000 tonnes a day, extending the production cuts to include Karamay and Qinghai.

Industry sources said a key reason for the move was that local refineries turned to cheaper imports or reduced production because of petrochemical products dumped by neighbouring countries.

The mainland produced more than 150 million tonnes of crude oil last year, of which about 143 million tonnes came from CNPC.

The official said CNPC would suffer losses from production cuts.

ICEA Securities research vice-president Angus Lau Kim-ming expected CNPC would have less profit in proportion to the volume decline.

'You're likely to see a slight decline in demand for and domestic production of crude oil this year.'