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PetroChina praises overseas E&P in financial report

29th August 2014

PetroChina announced that the company achieved steady growth in its production and operations, delivering sound operating results that exceeded expectations in the first half of 2014

PetroChina announced that the company achieved steady growth in its production and operations, delivering sound operating results that exceeded expectations in the first half of 2014
Wobbly first-half downstream performance has been eclipsed by strong overseas upstream development.

Wobbly first-half downstream performance has been overhadowed by strong overseas upstream development.  

For the six months ended 30 June 2014, the Chinese giant recorded turnover of around USD 188bn under the International Financial Reporting Standards (IFRS), representing an increase of 4.8 per cent over the same period of 2013. Net profit attributable to owners of the company was USD 11bn, representing an increase of 4.0 per cent over the same period in 2013.

 

Exploration and Production

In the first half of 2014, PetroChina enjoyed good momentum in its domestic oil and gas exploration operations. In terms of the natural gas exploration, large-scale reserves were built up at Tarim Basin, Erdos Basin and other regions. In terms of the oil exploration, key achievements were made at Erdos Basin, Junggar Basin and other regions.

Further successful achievements were also made in the exploration of tight oil. The company carried out an overall optimisation of oilfields development plans, emphasising the building of key production capacity. The company continued to implement the normalised fine water injection projects, made steady inroads in the secondary development, reinforced the steady production in mature oilfields and conscientiously organized material development experiments.

PetroChina also accelerated the development of shale gas and started up all the production building projects in Changning, Weiyuan and Zhaotong. The development of coal-seam gas moved into healthy track of development.

In the first half of 2014, as a result of the continuous transformation in its development mode, the improved management of investment cost control together with the efforts to improve overall profitability, the company’s profit from operations of the exploration and production segment increased by 3.5 per cent as compared to the first half of 2013.

 

Refining and Chemicals

In the first half of 2014, the downstream segment incurred a loss from operations amounting to USD 559m, substantially narrowing the loss by USD 2.02bn over the same period in 2013.

In the first half of 2014, the company emphasised the principles of market orientation and profitability, proactively optimised the production and operation of its refining and chemical business, controlled processing load in a reasonable manner, adopted a scientific approach to arrange for the maintenance of its production facilities and ensured safe and stable operations. The company also strengthened its market-oriented approach and optimized resources allocation and product structures. With the increase in output of high-margin products, various technical and economic indicators hit record highs.

PetroChina processed 500.0 million barrels of crude oil, representing an increase of 0.2 per cent over the same period in 2013, and produced 45.994 million tons of refined oil products, representing an increase of 1.9 per cent over the same period in 2013.

In the first half of 2014, despite exposure to the slowdown in the growth of demand for refined oil, the company managed to strengthen the coordination of its production and sales and to enhance its inventory management, strived to optimize its sales structure and focused on resources allocation in profitable markets. Sales of high-margin products such as high-grade gasoline and aviation kerosene underwent relatively rapid growth.

 

Natural Gas and Pipeline

In the first half of 2014, the natural gas and pipeline segment optimised its storage, transmission and marketing. The company effectively balanced the supply of domestic gas and imported gas resources, enhanced marketing efforts and optimised the structure of gas use.

The Yangtze River Delta, Pearl River Delta and Bohai Rim are the key areas of the company’s marketing efforts.

PetroChina also promoted realisation of reformed prices in the market, which consequently improved sales profitability of natural gas.

The construction and commissioning of key oil and gas pipelines and storages made steady progress. The operation of the west section of the Third West-East Gas Pipeline, the Hohhot-Baotou-Erdos refined products pipelines together with the Jilin-Changchun refined products pipelines commenced successfully.

In the first half of 2014, the Natural Gas and Pipeline segment recorded profit from operations of USD 664m.

 

Overseas Operations

In the first half of 2014, PetroChina strengthened its risk control and health, safety and environment (HSE) management and enhanced its overall production planning and coordination for its overseas oil and gas operations.

The capacity building progress for key projects such as the Rumaila project and the Halfaya Project II in Iraq and the MPE3 project in Venezuela picked up pace. The crude oil output and the marketable natural gas output from overseas operations amounted to 56.2 million barrels and 65.0 billion cubic feet, respectively. The oil and natural gas equivalent output amounted to 67.1 million barrels, which was on par with that in the same period in 2013.

 

Outlook

The mild recovery of the global economy will remain highly uncertain in the second half of 2014 and the international oil price will be under downward pressure. The domestic economy is expected to develop within a reasonable range. While the macroeconomic environment remains uncertain, the company will enhance its analysis and assessment of the situation, endeavour to promote the development of its core oil and gas business, coordinate and optimise its production and operations, broaden sources of income, reduce expenditure, control cost and improve efficiency, keep emphasizing the innovation-driven concept, and strive to reach its production and operation targets for the year.

With regard to the exploration and production segment, the company will set a target of maintaining smooth and balanced operations.

PetroChina will continue to give priority to oil and gas exploration, emphasise pre-exploration and venture exploration at key areas and key basins, address technological challenges in exploring oil and gas reserves with complex features, as well as expedite exploration and production of unconventional energy.

Meanwhile, the company plans to ensure the stable growth of oil and gas output by focusing on maintaining an annual oil equivalent output of 50 million tons at Changqing oilfield while improving its quality and profitability, and by accelerating the development of natural gas in southwest China and oil and gas fields in the Xinjiang region. In addition, the company wants to strengthen the preliminary study and technological reserve for deep sea exploration.

With regard to the marketing of refined oil products, PetroChina aims to create “the high margin terminal” for oil products and hence dedicates continuous efforts to expand sales, reduce inventory and improve profitability.

Also, PetroChina will carry out in-depth analysis for managing loss incurred in transport so as to increase profitability, while strengthening quality and measurement management for oil products to improve service levels.

As for the natural gas and pipeline segment, PetroChina will seek to expedite sales and profitability of its natural gas business and operational efficiency of its pipeline segment. It will achieve this by implementing the government's natural gas price reform policy, ensuring the smooth construction of key projects such as the middle section and east section of the 3rd West-East Pipeline, and the 4th Shaanxi–Beijing gas pipeline, as well as tighten the link between natural gas recourses and gas consumption plan to ensure the balanced operation of production, transportation and sales.

On the overseas operations segment, PetroChina will promote the development of its overseas business and enhance its scale and quality. In achieving this, PetroChina will optimise the business structure, assets allocation and regional distribution, strengthen oil and gas exploration in key regions such as Kazakhstan, and speed up exploration in offshore areas such as the Caspian Sea. Meanwhile, the company will strive to ensure production growth of new oilfields in regions including Iraq and Latin America, continue to foster cooperation with international oil companies and resource host countries, and ensure smooth implementation of projects for which agreements have been achieved.

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