PetroChina First-Half Oil and Gas Output Climbs 6.8%

PetroChina First-Half Oil and Gas Output Climbs 6.8%

PetroChina Co. increased oil and natural gas production 6.8 percent in the first half as energy demand soared in the world’s fastest-growing major economy.

Crude and gas output rose to the equivalent of 533.2 million barrels of oil, the Beijing-based company said today. Oil production gained 1.8 percent from a year earlier, while gas output jumped 31 percent. The average price PetroChina got for its crude oil surged 36 percent to $58.96 a barrel.

The nation’s biggest oil company benefited from expanded production at new fields amid record global prices for crude and as China allowed gas distributors to charge more for the fuel. China may consume 5.5 percent more crude oil next year, the International Energy Agency said July 12, after an estimated increase of 6.1 percent in 2006.

“The persistent strength in global oil prices and China’s will to boost domestic gas prices could mean more earnings upgrades ahead,” Gordon Kwan, who heads China oil and gas research at CLSA Ltd. in Hong Kong, wrote in a research note today. The figures increase the chances “for the oil giant delivering the highest ever first-half net profit by any company in Asia.”

PetroChina shares, up 34 percent this year, were 0.6 percent lower at HK$8.5 at 11:38 a.m. in Hong Kong, compared with the 0.8 percent decline in the benchmark Hang Seng Index.

Oil Processing

Oil production reached 419.1 million barrels in the first six months of this year as natural gas output reached 684.7 billion cubic feet, PetroChina said. It sold gas for 22 percent more, at $2.43 per thousand cubic feet, compared with $2.00 per thousand cubic feet a year earlier.

In the second quarter, PetroChina produced 211.4 million barrels of crude oil and 324.5 billion cubic feet of natural gas, according to the statement.

PetroChina’s oil processing in the first-half rose 3.5 percent to 392.6 million barrels, according to the statement. The company turned 195.8 million barrels of oil into fuels in the second quarter. The company increased the number of filling stations it operates 4.3 percent from a year earlier to 18,000.

“PetroChina continued to maintain productivity at its old oilfields, increased capacity at new oilfields and applied innovative technologies for oil exploration,” the company said in a statement.

China’s Daqing oilfield, operated by PetroChina, may continue producing for at least another 50 years as technology used to extract crude from the nation’s largest onshore source of the fuel improves.

Overseas Fields

Production from the field will be maintained at 2005′s level of 45 million tons (about 900,000 barrels a day) for the next five years, Han Xuejian, mayor of the northeastern city of Daqing, said on July 13.

PetroChina’s fields overseas pumped 23.7 million barrels of oil and 21.08 billion cubic feet of gas in the first six months, the company said today.

“The surprise is they can still manage to get more oil output from the aging fields in northeastern China,” said Steven Yuan, an analyst at Sun Hung Kai Securities Ltd. in Hong Kong. “Overseas production also contributed to the growth. The company has openly said they are relying on natural gas for future growth.”

Gasoline production in the first half rose 3.2 percent to 11 million metric tons. PetroChina sold the fuel for $495.63 a ton, 28 percent more than a year earlier, the statement said.

Diesel Production

Diesel production rose 2.6 percent to 22.2 million tons, and PetroChina sold the fuel at $482.67 a ton, an increase of 32 percent.

Kerosene output over the six-month period rose 6.7 percent to 1 million ton. The company sold the fuel at $531.56 a ton, compared with $410.79 a year earlier, according to the statement.

PetroChina’s gasoline output was 5.4 million tons in the second quarter, diesel production 11.1 million tons and kerosene output 526,000 tons.

The company’s ethylene output rose 6.6 percent in the first six months to 1 million tons, PetroChina said. Second-quarter production of the chemical, a raw material used to make plastics, was 523,000 tons.

China in December raised factory prices for natural gas and changed its pricing mechanism of the fuel. Prices for natural gas used by industries and city-gas distributors increased by between 50 yuan ($6.19) and 150 yuan per thousand cubic meters, the National Development and Reform Commission said Dec. 27.

`Favorable Environment’

The Chinese government will adjust gas prices annually, within an 8 percent range from the previous year’s level, it said.

“The company expects to continue to see a favorable business environment as a whole for the second half of 2006,” PetroChina said in its statement. PetroChina has started to receive oil shipments from Kazakhstan through the pipeline linking Alashankou with Dushanzi in China, it said.

China’s economy, powered by record exports and an investment boom, probably accelerated in the second quarter, a Bloomberg survey of economists showed. Gross domestic product jumped 10.4 percent from a year earlier after growing 10.3 percent in the first quarter, according to the median forecast of 30 economists. Figures will be released at 10 a.m. in Beijing tomorrow.

Crude oil for August delivery rose as much as 71 cents, or 0.9 percent, to $77.74 a barrel in after-hours electronic trading on the New York Mercantile Exchange today. On July 14, oil rose 33 cents, or 0.4 percent, to a record close of $77.03 a barrel after earlier in the session touching $78.40, the highest intraday price since trading began in 1983. Prices rose 4 percent last week and at the July 14 close were 33 percent higher than a year ago.

PetroChina’s 2005 net income climbed 28 percent to 133.4 billion yuan, the company said March 20.


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