Lower crude prices, refining losses cut oil giant's H1 net profit by 6%

PetroChina Co Ltd - the country's largest oil producer - is actively seeking acquisition opportunities in Central Asia, East Africa, Australia and Canada, the company said on Thursday after posting a 6-percent decline in first-half profit on lower crude prices and further losses in refining and chemicals.

Net income fell to 62.03 billion yuan ($9.76 billion) from 66.01 billion yuan registered a year earlier, PetroChina said in a statement to the Hong Kong Stock Exchange. Total income during the first six months rose 9.9 percent to 1.05 trillion yuan.

The Beijing-based energy explorer and oil refiner pumped 452.4 million barrels of crude in the first half, up 1.5 percent over 445.8 million barrels in 2011, while the average selling price increased 6.3 percent to reach $107.98 a barrel over the average $101.62 last year.

Total output oil and gas output rose 3.8 percent to the equivalent of 667.9 million barrels during the period. Some 62.5 million barrels came from its overseas assets, which rose 0.9 percent to account for 9.4 percent of the company's total output.

The company registered a loss of 28.9 billion yuan from refining and chemicals due to factors such as the slowdown of Chinese economy and control over domestic fuel prices, the statement said. The delay in natural-gas pricing reforms has also continually eroded profits.

"The lull global economic situations bring more merger and acquisition opportunities abroad PetroChina will evaluate these opportunities prudently, and we are actively seeking acquisition opportunities in central Asia, East Africa, Australia and Canada," Vice-Chairman and President of PetroChina Zhou Jiping said in Hong Kong on Thursday.

The energy group's capital expenditure is estimated to reach 300 billion yuan this year, among which some 100 billion yuan will be allocated in overseas projects, Zhou said. He added that PetroChina will boost overseas production to account for a half of total oil and gas output in the next five to eight years.

"PetroChina should also bear in mind that overseas acquisition is not easy given these assets they purchase are considered sensitive, particularly most of which they seek are onshore projects, which is even more sensitive than the offshore ones," Kenny Tang, executive director from AMTD Financial Planning Ltd, told China Daily in a telephone interview.

China's leading offshore oil producer CNOOC Ltd on Tuesday reported a worse-than-expected 19-percent decline in first-half profit. CNOOC also vows to boost output through overseas acquisition, which cut its dividend by 40 percent to make room for its $15.1-billion acquisition of Canadian oil firm Nexen Inc. But the deal has yet to get approval from Canadian and US regulators.

Besides regular oil and gas productions, PetroChina will keep up with heavy investments on the development of unconventional natural gas business. The company will spend more than 10 billion yuan on the three types of unconventional clean energy, namely tight gas, coal bed methane and shale gas, which are also vast in reserves in China, Zhou said.

The state-owned energy giant will continue to invite private capital to look for investment opportunities jointly in infrastructure facilities such as oil and gas pipeline construction. The company said in May it would introduce private investment in the third West-East gas pipeline construction, which is due for completion within three years.

Zhou denied that cooperation with private capital was due to the company's shortage of cash flow, saying the new move is aimed at promoting common development among both state-owned and private enterprises.

litao@chinadailyhk.com

(HK Edition 08/24/2012 page2)