PetroChina sets spending limit for next few years to improve efficiency
Mainland oil and gas producer pushes quality and efficient growth while capping budget for production capacity boost at 296.5 billion yuan
PetroChina will limit its spending for production capacity expansion in the next few years to 296.5 billion yuan (HK$370 billion), after cutting it last year for the first time since its listing in 1999.
Chairman Zhou Jiping said the nation's largest oil and gas producer, whose profitability and share price have fallen in the past few years, needed to improve efficiency so that its expansion was of "high quality, efficient and sustainable".
"Last year was a key transition point for PetroChina, whose development has changed from one focused on scale and speed to one that emphasises quality," Zhou told reporters after the company posted a 12.4 per cent increase in net profit to 129.6 billion yuan. The figure was 2.8 per cent higher than the 126.1 billion yuan average estimate of 30 analysts polled by Thomson Reuters.
PetroChina's expenditure was 318.7 billion yuan last year, 10.2 per cent lower than budgeted, with oil refining, chemicals production and fuel distribution bearing the sharpest cuts.
The company's 296.5 billion yuan spending this year is 7 per cent below that of last year, with gas distribution and transport bearing most of the cut.
Last year's profit was propped up by a 24.8 billion yuan gain from a stake divestment in gas pipeline assets to asset management firms, excluding which PetroChina's pre-tax profit would have fallen 8.1 per cent.
Zhou said the firm, 86.4 per cent owned by the state, would "proactively" invite the private sector to co-invest in its projects, including pipelines, undeveloped and difficult-to-extract oil and gas reserves, refineries, chemical plants and overseas business, as part of state enterprise reforms mandated by Beijing to boost efficiency.
PetroChina's oil and gas production division saw operating profit fall 11.8 per cent to 189.7 billion yuan as production cost rose 12.7 per cent to US$13.2 per barrel, and average oil selling price fell 3.1 per cent. They more than offset a 15 per cent rise in gas output and a 9 per cent increase in gas selling price.
Oil refining operating loss narrowed to 4.7 billion yuan from 33.7 billion yuan, thanks to a reform of Beijing's fuel pricing policy that cut subsidies to consumers.
The chemicals division saw operating loss widen to 19.7 billion yuan from 9.8 billion yuan amid oversupply.
Gas import losses amounted to 41.9 billion yuan, flat from 2012. Overseas operations' before-tax profit sank 37 per cent to 20.5 billion yuan.
The firm plans to raise oil output by 1.3 per cent this year and gas output by 7 per cent so that total oil and gas output rises a targeted 3.2 per cent to 1.4 billion barrels of oil equivalent.
The company expects to complete building the Longwangmiao gas field in Sichuan province with annual output capacity of 11 billion cubic metres - 14 per cent of its gas output last year - after next year.
PetroChina's shares yesterday closed 0.91 per cent lower at HK$7.62.