Petrochina 2016 Profit Sinks 78% On Lower Crude Prices

China's largest oil and gas producer, PetroChina, on Thursday reported a drop of 78 percent in 2016 annual net profit, to its lowest since at least 2011, as it was hit by lower prices for crude oil and natural gas.

The shrinking profits posted by China's state oil and gas producers for last year have highlighted their growing challenges from falling output at aging wells and excess supply in domestic fuel oil markets.

PetroChina's net profit sank to 7.86 billion yuan ($1.14 billion) from 35.7 billion yuan in 2015, while revenue fell 6.3 percent to 1.62 trillion yuan ($235 billion), based on IFRS accounting standards.

PetroChina's crude oil production fell 5.3 percent to 920.7 million barrels in 2016 - still the highest among global oil producers including BP and Shell - but marking the lowest for PetroChina since 2012, according to Reuters data. The state company's crude oil output peaked in 2015 at 972 million barrels.

PetroChina's total oil and gas output for the year was 1.47 billion barrels of oil equivalent, down 1.8 percent from 2015.

PetroChina had 7.44 billion barrels of proven crude oil reserves, down 12.7 percent from 2015, it said.

In its annual report, the company said domestic gasoline demand was lower than expected, while diesel consumption fell.

"The situation of excessive supply in domestic refined products became severe" last year, it said.

"The quantity of imported and processed crude oil, operating capacity, and market shares of local refineries (all) increased significantly, leading to fiercer market competition."

PetroChina's smaller upstream competitor CNOOC - a specialist in offshore operations - earlier reported its worst result since 2011, but forecast its output to rise this year.

Profits at Sinopec - Asia's largest refiner - rose 44 percent from a year earlier on the back of strong performances in refining and chemicals.

Sinopec's oil and gas production in 2016, however, fell 8.6 percent to 431.29 million barrels of oil equivalent versus 471.91 million a year earlier.