PetroChina expects 50-60 per cent jump in first-half profit on higher oil prices triggered by Russia-Ukraine war

  • China’s biggest oil company estimates net profit rose between 26.5 billion yuan (US$3.9 billion) and 32 billion yuan in the January to June period
  • Brent crude has traded between US$78 and US$123 a barrel this year, higher than last year’s average of US$71

PetroChina, the nation’s biggest oil and gas producer, said first-half profit increased by 50 per cent to 60 per cent on the back of rising oil prices following Russia’s invasion of Ukraine.

The state-backed energy giant, with upstream and downstream operations, estimated that net profit rose between 26.5 billion yuan (US$3.9 billion) and 32 billion yuan for the six months to June 30, according to a filing to the Shanghai exchange on Friday. This means it could report an interim profit of between 79.5 billion yuan and 85 billion yuan in August, up from 53 billion yuan in the same period last year.

“The main reason for the profit growth is our increased exploration and production effort, cost control and efficiency measures, besides higher international oil price and growth in oil and gas sales volume,” PetroChina said in the filing.

Brent crude has traded between US$78 and US$123 so far this year, with prices rising sharply after Russia invaded Ukraine in late February. The oil benchmark averaged US$71 a barrel last year, 70 per cent higher than in 2020.

Prices have weakened this month on the back of fears that energy price-induced high inflation would result in a global recession.

In March, PetroChina unveiled targets to raise oil output by 1.2 per cent and gas production by 4.6 per cent, while aiming to lift refining throughput by 3.6 per cent this year.

The targets were announced after the central government set a gross domestic product target of 5.5 per cent for this year, which economists said would be challenging to achieve given the flare up of coronavirus cases on the mainland and global economic slowdown caused by the energy crisis.

Mainland China‘s fuel demand has been dampened by a wave of Covid-19 cases, which resulted in various degrees of city lockdowns in large swathes of the country in April and May.

The nation’s economy grew by just 0.4 per cent in the second quarter compared to the year-earlier period, down from 4.8 per cent seen in the first quarter. Economists expect the slow recovery, which started in June, to pick up pace in the third quarter.

PetroChina is expected to post a net profit of 115.6 billion yuan for the year, up from 92.2 billion yuan last year, according to the average estimate of 12 analysts polled by Bloomberg.

Meanwhile, fellow state-backed dominant offshore oil and gas producer CNOOC said on Thursday it expected to post a first-half net profit of between 70.5 billion yuan and 72.5 billion yuan, 112 per cent to 118 per cent higher than last year.

Analysts expect full-year net profit to rise to 121.5 billion yuan, from 70.3 billion yuan last year.

In January, the company set a target to boost its oil and gas output by between 4.7 per cent and 6.5 per cent this year, after lifting it by 8.5 per cent last year.

Author: Eric Ng, SCMP

You might also like