Oil titan PetroChina’s production plan and budget hang in the balance as coronavirus, oil price war cloud economic outlook
- China’s largest oil and gas producer has deviated from its long-standing practice of unveiling clear production targets when it announces its annual results
- Oil prices have halved to around US$25 a barrel after Saudi Arabia unleashed a price war with Russia following a breakdown in talks early this month
PetroChina, the nation’s largest oil and gas producer, has deviated from its long-standing practice of unveiling clear production targets when it announces its annual results, as the coronavirus pandemic and an oil price war clouds the global economic outlook.
“The oil price’s free-fall since last month has dealt the heaviest blow to our upstream production operation,” vice-president Li Lugang said via teleconference after the state-backed energy giant reported a worse-than-expected 13.9 per cent decline in annual net profit on Thursday.
“Given ongoing price volatility, we will adjust our production plan to balance volume versus profitability, short-term versus long-term profits, besides taking into account the need to ensure energy supply security.”
The uncertainties meant the company’s spending budget for this year’s projects – approved earlier by the board at 295 billion yuan – will be “dynamically optimised” to generate positive cash flow, said chief financial officer Chai Shouping.
“We are devising a plan to link projects spending to oil price,” he said, adding it will not make sweeping cuts across business divisions.
Net profit for last year came to 45.7 billion yuan, down from 53 billion yuan in 2018 and 5 per cent less than the 48.09 billion yuan average estimate of nine analysts polled by Bloomberg.