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Profit skids on oil

By Wan Zhihong (China Daily)
Updated: 2008-08-28 18:53

PetroChina Co, the country's largest oil company, said first-half profit fell 34.5 percent as refining losses and taxes cut gains from record crude oil prices.

The company's net profit dropped to 53.62 billion yuan ($7.84 billion), or 0.29 yuan a share under international financial reporting standards, said a company statement yesterday. In the first half of 2007 PetroChina's net profit was 81.83 billion yuan, or 0.46 yuan a share.

"PetroChina's financial performance was adversely affected by factors including the increase of a special levy on domestic oil production, refined product prices below the international level and the hike in raw materials cost," said Zhou Jiping, vice-chairman and president of PetroChina.

Because of the government's caps on refined oil prices, PetroChina's oil refining and sales businesses saw losses of 59.02 billion yuan in the first six months, said the announcement.

"PetroChina's drop in profit is within our expectations," said Wang Jing, an analyst with Orient Securities in Shanghai. "If crude prices go down in the third quarter, the company's performance will be better than in the first half."

In another statement to the Hong Kong stock exchange yesterday, PetroChina said it will buy a 51.89 percent stake in CNPC (Hong Kong) from parent China National Petroleum Corporation (CNPC) in a HK$7.59 billion ($972.17 mililion) deal.

"After the acquisition, PetroChina will become a controlling holding company of CNPC (HK). PetroChina will then explore with CNPC (HK) potential opportunities to jointly develop city gas, vehicle fuel gas and other natural gas businesses in end-user markets," said the statement.

China's third largest oil company China National Offshore Oil Corp (CNOOC) Ltd also announced its first-half results yesterday, posting an 89.3 percent increase in net profit year-on-year.

The company's net income rose to 27.54 billion yuan, or 0.61 yuan a share, from 14.6 billion yuan, or 0.34 yuan, a year earlier, CNOOC Ltd said in a statement yesterday.