PetroChina posts first ever quarterly loss on oil plunge while Sinopec reports big profit jump

The ongoing oil price slump has hit PetroChina, the nation’s largest oil and gas producer, much harder than fellow state-backed China Petroleum & Chemical (Sinopec), whose bigger and more efficient refining and chemicals operations has saved it from plunging into a loss. PetroChina posted late on Thursday a net loss of 13.78 billion yuan for the three months to March 31, its first ever quarterly loss. That compares with a profit of 6.15 billion yuan for the same quarter last year. The loss was much steeper than the 9.2 billion yuan loss estimated by BNP Paribas head of Asia energy research Por Yong-liang, who said he expected its results to be hurt not only by lower oil selling prices, but also oil inventory losses and lower gas earnings after a 28 per cent wholesale price cut in November. A 37.6 billion yuan fall in oil and gas production operating profit could not be offset by much improved refining, fuel distribution and chemicals profits. PetroChina annual profit slips 67 per cent on weaker oil prices Oil and gas output rose 2.6 per cent while per-barrel oil production cost fell 8.2 per cent. Average oil selling price slumped 44.2 per cent year on year to US$27.27 a barrel. “The group will continue to optimise its assets structure ... cut expenditure and improve efficiency,” it said in a filing to Hong Kong’s bourse. By contrast, Sinopec, the world’s second largest oil refiner, on Thursday reported a first-quarter net profit of 6.66 billion yuan, triple the 2.17 billion yuan in the year-earlier quarter. A widening of oil and gas production operating losses by 11.2 billion yuan was more than offset by an improvement in refining profit by 17.2 billion yuan, and a 4 billion yuan rise in profit from fuel marketing and chemicals production. Refining profits of both Sinopec and PetroChina were helped by a refined fuel price floor imposed by Beijing whenever crude oil prices sinks below US$40 a barrel. PetroChina, Sinopec third quarter profits hit by oil price rout But sister firm Sinopec Oilfield Service, whose largest customer is Sinopec, on Thursday unveiled a 1.68 billion yuan first-quarter net loss, widening from a 368.7 million yuan loss in the year-earlier quarter, as work volume dwindled. CNOOC, China’s dominant offshore oil and gas producer, on Thursday said first-quarter revenue fell 30.7 per cent year on year to 24.64 billion yuan, on the back of a 39.1 per cent tumble in average oil selling price to US$32.54 a barrel and a 14.8 per cent fall in gas price to US$5.69 per thousand cubic feet. It was partially offset by a 5.1 per cent rise in oil and gas output to 124.3 million barrels of oil equivalent as new projects came on stream offshore China. Chief financial officer Zhong Hua gave reporters CNOOC’s first official response to a gas price dispute with partner Husky Energy, a Canada-based oil and gas firm controlled by Hong Kong tycoon Li Ka-shing. Husky on Monday said in its first-quarter results filing that its Liwan 3-1 natural gas field in the South China Sea – in joint venture with CNOOC – has its selling price fixed for the first five years, after which it will be linked to Chinese benchmark pricing subject to a floor and a ceiling. Husky said CNOOC officials had indicated changes in the Guangdong gas market meant gas prices are under pressure to be cut. China’s Sinopec Oilfield seeks growth in overseas and gas drilling to offset oil work plunge Husky said it has an enforceable contract on the fixed selling price and is in talks with CNOOC to find a solution, adding it will take legal action if a “satisfactory outcome in not obtained” in ensuring that any changes in the contract terms must be “value neutral” to Husky. Zhong said CNOOC will continue its ongoing communication with Husky in a bid to “resolve the challenge”, adding CNOOC always abides by its contractual obligations. Meanwhile, CNOOC’s first-quarter capital expenditure on projects to raise output dropped 39.2 per cent year on year to 9.69 billion yuan. It saw sister firm China Oilfield Services (Cosl), its largest drilling services supplier on Thursday post a first-quarter net loss of 926.6 million yuan, compared with a profit of 970 million yuan in the year-earlier quarter. Cosl said it expected to post a “significant loss” for the year’s first half. Li Ka-shing’s Power Assets and CKI to invest in his troubled Canada-based oil firm Husky Despite a failure on talks among the world’s largest oil exporters to reach an agreement to freeze production this month, oil price has moved higher on the back of growing evidence that the oil market is gradually rebalancing, Por said in a report. “In the coming months, we expect to see oil demand to significantly rise as refineries return from maintenance,” he wrote, adding consultancy IHS has forecast oil demand to exceed supply in this year’s second half, for the first time since late 2013.