PetroChina posts 33pc year-on-year decline in third-quarter profit

Upstream production holds up while refining, petrochemicals and gas distribution lost money

PUBLISHED : Wednesday, 31 October, 2012, 12:00am
UPDATED : Wednesday, 31 October, 2012, 4:12am

PetroChina, the nation's largest oil and gas producer, posted a sharper-than-expected 33 per cent year-on-year decline in profit as three out of four of its operating segments were hit by a slower economy.

The company recorded a net profit of 24.93 billion yuan (HK$30 billion) in the three months to September 30, down from 37.4 billion yuan in the same period last year.

This is also 8.7 per cent lower than the 27.3 billion yuan average estimate of eight analysts polled by Bloomberg.

For the first nine months, net profit dropped 15.9 per cent year on year to 86.96 billion yuan.

Nearly all of its profit was derived from upstream oil and gas production in the third quarter, where operating profit slid 13.3 per cent year on year to 49.5 billion yuan. This is despite a 4.2 per cent rise in oil and gas output to 329 million barrels of oil equivalent, owing to a lower average oil selling price and higher costs.

Natural gas distribution reported a third-quarter operating loss of 750 million yuan, compared with a profit of 2.5 billion yuan in the year-earlier quarter. This was due to rising imports from Central Asia, and continued losses due to higher import prices compared with state-controlled wholesale prices.

Oil refining and petrochemical production saw net loss in the third quarter halved to 8.5 billion yuan from a loss of 17.4 billion yuan in the year-earlier period.

This was due to two fuel price rises in August and September. Unlike rival China Petroleum & Chemical (Sinopec), PetroChina does not separately disclose its oil refining and chemical production performance. It is not clear whether PetroChina had better chemical profitability as many of its customers experienced lower demand from Europe.

Sinopec on Sunday reported a third-quarter petrochemical operating profit of one billion yuan, down from 7.3 billion yuan in the year-earlier quarter, while oil refining saw a three billion yuan operating profit, sharply better than a loss of 10.9 billion yuan in last year's third quarter.

Sinopec's 9.4 per cent year-on-year net profit decline in the third quarter was 29 per cent higher than expectations and Jefferies Securities said the performance could be due to it re-allocating profits from oil production to refining, citing lower-than-expected oil production profit.