China National Petroleum Corporation

Oil levy payment points to 29pc drop in CNPC pre-tax earnings

PUBLISHED : Wednesday, 21 January, 2009, 12:00am
UPDATED : Wednesday, 21 January, 2009, 12:00am

China National Petroleum Corp (CNPC), the country's largest oil and gas producer, may have recorded a 29.1 per cent decline in pre-tax profit last year, a mainland newspaper said.

The parent of listed PetroChina paid just over 85 billion yuan (HK$96.4 billion) to the central government last year in oil revenues special levy, a form of windfall tax, China Business News quoted a company source as saying.

The payment amounted to 62.42 per cent of CNPC's pre-tax profit last year, it added. This implied the profit amounted to 136.17 billion yuan, compared with reported pre-tax profit of 191.98 billion yuan in 2007.

CNPC's spokesman declined to comment on the figures.

The tax, levied on oil revenues above US$40 a barrel, together with hefty refining losses in last year's first half due to state fuel price controls, were largely to blame for the profit decline, analysts said.

The report also said CNPC would keep this year's capital investment at a similar level to last year's despite plunging oil prices.

The energy giant has budgeted just over 290 billion yuan of capital expenditure this year, largely in line with what it spent last year, it said.

A source at PetroChina said the listed company's expenditure plan for this year 'will not be significantly different from that of 2008'. The actual spending last year was also in line with the 207.9 billion yuan budgeted early last year, he said.

Although total expenditures would not change much from last year, some expansion and upgrading projects at older refineries and petrochemical plants would be deferred, while lower raw material costs would help contain spending.

'Projects in our core business of oil and production will certainly be maintained, and downstream projects like the Dushanzi petrochemical plant (in Xinjiang autonomous region) and the Qinzhou refinery (in Guangxi Zhuang autonomous region) will certainly be completed as planned,' the source said.

CNPC's spending is much larger than that of PetroChina's because its assets include oil and gas exploration, production and refining assets in some politically sensitive countries, such as Sudan, as well as some minor refineries and petrochemical assets, in addition to a majority stake in PetroChina.

CNPC also operates various units responsible for oilfield drilling and engineering, as well as seismic data collection and analysis services.