Oil and gas producer PetroChina posts 4pc first-half profit rise
Firm also clears troubled northeastern projects to set their own production plans and budgets
PetroChina, the nation's largest oil and gas producer, reported yesterday a 4 per cent rise in net profit for the first half to 68.1 billion yuan (HK$85.6 billion) while it unveiled a project to give operational autonomy to two oil and gas production units as part of state enterprise reform.
The profit is 3.7 per cent higher than the average 65.7 billion yuan forecast by analysts polled by Thomson Reuters and was mostly due to its oil refining operation's booking of an operating profit of 4.4 billion yuan from a loss of 7.8 billion yuan in last year's first-half. The profit was due mainly to Beijing's policy to let domestic fuel prices match international oil price levels.
The company has allowed management of Liaohe and Jilin oilfields in the northeast which struggled to arrest output and a decline in profit, to set their own production plans and investment budgets, president Wang Dongjin told reporters.
"The objective of the pilot is to incentivise the fields' management to come up with ways to maximise profit," Wang said. Parent China National Petroleum Corp also plans to make its oilfield services units' more market-oriented and let local units conduct their own materials procurement to enhance efficiency, he added. "In the long term, our group's oilfield services must become more profit-oriented."
PetroChina's first-half profit was also helped by a 3.2 billion yuan loss reduction from natural gas imports, after Beijing lifted domestic gas prices by about 15 per cent in July last year as part of a three-year plan to lift domestic prices to near international levels as the nation relies more on oil imports.
PetroChina's materials and services spending on oil and gas exploration and production fell 9 per cent year on year as it tightened scrutiny on efficiency, after a string of top-level executives were removed last year to assist graft investigations.
Wang expected domestic fuel oversupply to persist, adding the firm is targeting a full-year refining profit of 10 billion yuan.
Separately, dominant offshore oil and gas producer CNOOC posted a 2.3 per cent year-on-year fall in first-half net profit to 33.6 million yuan, beating analysts' average estimate of 29.6 billion yuan.
This is mainly due to lower-than-expected cost increases. Operating cost per barrel of output rose 7 per cent year on year to US$11.78 with the inclusion of two more months of operation from Canada's Nexen field acquired in late February last year. Per barrel asset depreciation, depletion and amortisation fell slightly to US$20.8 from US$20.91 in last year's first-half.
Chief executive Li Fanrong said Nexen's Long Lake oil sands project achieved its maiden profit in the year's first half, after its chief executive was replaced and cost control measures implemented.