CNPC offshore oil output rises 11.5pc to record 60.2m tonnes
China National Petroleum Corp (CNPC), the parent of listed PetroChina, has lifted offshore oil output by 11.54 per cent to a record 60.23 million tonnes.
However, the increase was still lower than the 50 per cent growth notched up in 2006 when output was swelled by CNPC's acquisition of PetroKazakhstan's assets.
The oil major's overseas output still far outstripped its domestic output, which grew by one million tonnes, or just 0.94 per cent from 106.6 million tonnes in 2006.
Mainland oil firms are relying on overseas acquisitions to drive growth because additional contributions from new domestic fields can barely compensate for declining output from mature fields.
The country's domestic output grew 1.7 per cent to 183.67 million tonnes in 2006.
CNPC did not give details of what drove last year's rise in offshore output, but said its Sudan 1/2/4 oil block's output totalled 13.5 million tonnes, while its Sudan 3/7 block reached 10.02 million tonnes and PetroKazakhstan topped 10 million tonnes. It did not provide comparative figures.
CNPC's Sudan 6 block's output was only about two million tonnes, according to an earlier company estimate, implying that the Sudan fields accounted for at least 42 per cent of offshore output last year.
The Sudan investment has prompted critics to accuse the company of indirectly giving money to government-backed militias, which have been accused of genocide in the Darfur region. CNPC has two more exploration blocks in Sudan that may boost output.
Separately, a China Petroleum & Chemical Corp (Sinopec) official said the company was likely to receive a hand-out from the central government to compensate for its refining losses, but did not know how much.
Reuters quoted unnamed company sources as saying the subsidy would be between 10 billion yuan and 15 billion yuan, up from five billion yuan in 2006 and 10 billion yuan in 2005.
The rise in the expected subsidy comes despite estimates that Sinopec's profit last year was higher than the 53.91 billion yuan it made in 2006.
DBS Vickers analyst Gideon Lo Wai-yip said the subsidy range quoted equates to 15 per cent to 22.7 per cent of the 66 billion yuan that he estimates was Sinopec's net profit for last year, before any subsidy is included.
He estimated that Sinopec was losing more than US$15 for every barrel of oil it processed at current international oil prices of around US$100, even though the yuan's appreciation has lifted its refining break-even point to more than US$70 a barrel.
'As some 80 per cent of Sinopec's refining throughput is from imported oil, it is reasonable for it to get a subsidy,' Mr Lo said. 'Otherwise, Sinopec will have no incentive to keep expanding its refining capacity.'
PetroChina had not received any state subsidy, he said.
Mainland oil firms pin their hopes on overseas assets to drive growth
Estimated contribution of CNPC's Sudan fields to the company's total offshore oil output last year: 42%