PetroChina 2009 Interim Results

Source: 8/28/2009, Location: Asia

PetroChina Company Limited announced that the profit attributable to the owners of the Company under IFRS was approximately RMB50.5 billion for the six months ended 30 June 2009 and basic and diluted earnings per share was RMB0.28. The performance reflects the Company’s measures to effectively respond to the serious challenges and consequences caused by the global financial crisis. The Board of Directors of the Company has resolved to declare and pay an interim dividend of RMB0.12417 per share (including tax) on the basis of 45% of the profit attributable to the owners of the Company for the period under IFRS.

Faced with a decline in international crude oil prices, shrinking domestic demand for oil and petrochemical products and sluggish sales of products this year, the Company implemented a series of measures and focused on maintaining stable yet fast development in production and operations through comprehensive arrangement and careful planning in a scientific manner. With the concerted efforts of staff across the whole company, the first half of 2009 witnessed stable, orderly and effective production and operation, rapid development in natural gas and international businesses and marked results in the effects of enhanced controls over investments, reduced costs and improved efficiencies. In the first half of 2009, the Company achieved a profit in all four business segments with operating efficiency increasing on a month by month basis, and the Company’s operating results were better than expected.

Exploration and Production
In the first half of 2009, the Company focused on long-term development and priority was given to pre-exploration and risk exploration projects. The Company formulated and implemented optimal plans in oil and gas exploration and achieved significant progress in the Songliao Basin, Bohai Bay Basin, Erdos Basin, Tarim Basin, Junggar Basin and Sichuan Basin, which strengthened the foundation for stabilizing and increasing oil and gas production.

The Company actively adjusted the production levels of crude oil and construction plans for production capacity in response to market changes with the aim of achieving economic benefit in the development of oil and gas fields and balanced and stable production. In the first half of 2009, output of crude oil was maintained at a stable level of 418 million barrels. By focusing on meticulous management and sophisticated measures in production in key gas fields, organized in a scientific manner, output of marketable natural gas was 1.02 trillion cubic feet, representing an increase of 10.6% from the same period of last year, continuing the rapid growth.

During the period under review, the exploration and production segment realized profit from operations of RMB37.64 billion, continuing to be the main source of earnings for the Company despite a reduction of 71.3% compared to the same period of last year due to factors such as the sharp decrease in international crude oil prices.

Refining and Chemicals
Since 1 January 2009, the Company restructured its business segments to create integrated operations for refining production and chemicals marketing. In the first half of 2009, the refining and chemicals businesses focused on improving efficiency, strengthened detailed benchmarking, implemented cost saving measures and made efforts to overcome the adverse effects of high level of inventories and declining market demand to achieve safe and steady operations.

For the refining business, capitalizing on the new pricing mechanism for refined products, the Company intensified production management, pushed forward with overall resources optimization and improved its product structure through a market-oriented approach. The Company made reasonable adjustments to the proportion of diesel to gasoline, and produced more high value-added products. In the first half of 2009, the total processed crude oil was 52.69 million tons, and output of gasoline, kerosene and diesel was 11.19 million tons, 1.03 million tons and 22.33 million tons, respectively. In terms of the chemicals business, output of ethylene, synthetic resin and urea was 1.32 million tons, 2.03 million tons and 2.05 million tons, respectively. In addition, by leveraging the centralized sales and marketing network, the scope of the marketing was expanded and efforts were made to promote sales at favorable prices. Production of chemical products amounted to 8.19 million tons, similar to that of the same period of last year.

In the first half of 2009, the Company made notable progress in its refining and chemical strategy and key projects, including finishing the Dushanzi Petrochemical ten-million-ton refining facility and million-ton ethylene facility. Construction of the Guangxi Petrochemical ten-million-ton refining project, the Tarim Petrochemical chemical fertilizer project and the Urumqi Petrochemical aromatic hydrocarbon project was accelerated, and the Fushun Petrochemical ethylene project and the Sichuan Petrochemical refining and chemical integration project commenced construction.

During the period under review, the refining and chemicals segment realized profit from operations of RMB17.19 billion, hitting a historical high for the same period under review, which made a positive contribution to the improvement in the Company’s operating performance.

After the re-segmentation of the business segments, marketing of refined products became an independent segment in management terms. In the first half of 2009, facing a complex and volatile market situation, the Company optimized the dispatch and transmission network, adjusted marketing strategies in a timely way, actively developed commercial users with high efficiency and usage, enhanced marketing standards, speeded up the expansion of the refined products marketing network and construction of storage facilities. As a result, supply capability was further improved and operational efficiency was enhanced. Total sales of gasoline, kerosene and diesel in the first half of 2009 were 47.03 million tons, showing growth of 2.9% over that of last year.

During the period under review, the marketing segment realized profit from operations of RMB7.29 billion, basically flat to that of the same period of last year.

Natural Gas and Pipeline
In the first half of 2009, the Company achieved significant breakthroughs in construction of its oil and gas pipeline network. The Mohe-Daqing segment of the China Russia Oil Pipeline has commenced construction. The main line of the Central Asia Gas Pipeline was successfully fully welded; the main western section of the Second West-East Gas Pipeline was also successfully fully welded and construction of the eastern section was started; the Yongqing-Tangshan-Qinhuangdao Gas Transmission Pipeline and the Lanzhou-Zhengzhou section of the Lanzhou-Zhengzhou-Changsha Refined Products Pipeline were completed and commissioned; construction of the Tertiary Shaanxi-Beijing Gas Pipeline, the Se-Ning-Lan Double Line and the Qinhuangdao-Shenyang Gas Pipeline were started; and key LNG projects in Dalian and Jiangsu showed smooth progress.

For the natural gas marketing business, the Company leveraged the competitive advantage of the nationwide pipeline network to strengthen the balance of production, transportation and marketing. As a result, sales of natural gas amounted to 29.4 billion cubic meters, representing an increase of 17.9% from the same period of last year, maintaining the same pace of rapid growth of production. This also ensured safe and stable supply of natural gas for major cities, utilities and key industrial users.

During the period under review, the natural gas and pipeline segment realized profit from operations of RMB9.87 billion, representing an increase of 17.5% from the same period of last year, making an increasing contribution to the profit of the Company.

International Business
Faced with the global financial crisis, the Company made use of the favorable environment brought about by the lower international crude oil price to search for opportunities for international development. The Company actively expanded overseas oil and gas cooperation and effectively carried forward onshore oil cooperation at home. During the first half of 2009, the Company successively won and signed numerous overseas cooperation projects including the Iraq Rumaila Oilfield. The Company, together with British Petroleum, has won the first round of international bidding for rights to develop Iraq’s Rumaila Oilfield, which represents major breakthroughs in the Company’s oil and gas development and the service market in Iraq. This expands oil and gas cooperation in Iraq and helps the Company to further strengthen its supply capability in oil and gas. In addition, the Company completed the acquisition of equity stakes in Singapore Petroleum Company Limited and a refinery in Osaka, Japan, which made available new platforms for carrying out its international strategy and was beneficial to the further improvement of the Company’s industry chain.

In the first half of 2009, the Company’s international business realized oil and gas net production of 50.97 million barrels of oil equivalent, representing an increase of 11.5% from the same period of last year, accounting for 8.7% of the Company’s total output and further expanding its contribution to the Company. By actively creating new operational models for international trading business and expanding the international marine transportation business, the scale of the Company’s international trading business is growing gradually.

Prospects for the second half of 2009
At present, the domestic economy is experiencing positive developments and more favorable conditions and factors. In the second half of this year, the Company will continue to readjust and optimize its structure, reinforce its capability for independent innovation, push forward energy saving and emission reductions, and consolidate and expand the stable yet fast development in the first half of 2009. The Company has endeavored to fulfill all targets for this year. The Company will continue to strive to enhance corporate value and maximize returns to its shareholders, society and our staff.

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