PetroChina triples chem op profit, takes refining hit

19 March 2008 10:14  [Source: ICIS news]

SINGAPORE (ICIS news)--PetroChina has more than tripled its chemicals operating profit in 2007 from a year ago on higher output and sales, but government taxes and controls on refined product prices hit the group’s earnings, it said on Wednesday.

At group level, the Chinese energy major’s net profit rose only 2.4% to yuan (CNY) 145.6bn ($20.6bn) despite a 21.1% rise in turnover to CNY835bn.

But PetroChina’s operating profit for its chemical segment rose to CNY7.8bn in 2007 from CNY2.8bn a year ago, it said in a statement.

Chemical output was up 16.6% to 15.55m tonnes during the same period. Ethylene production rose 24.8% to 2.58m tonnes while its synthetic resin output increased 29.4% to 3.96m tonnes.

PetroChina also produced 1.46m tonnes of synthetic fibre raw materials and polymer in 2007, up 18.4% from a year ago.

Beijing’s promise to maintain product prices as a measure to keep inflation under control has continued to hurt PetroChina’s refining and marketing segment. It recorded an operating loss of CNY20.7bn last year compared with CNY29.2bn in 2006.

The company’s crude oil processing volume hit a record 824m bbls, up 4.9% from a year ago as the state-owned major had to ramp up production to satisfy the country’s demand despite suffering from losses.

PetroChina was expected to post further refining losses this year as the government was unlikely to raise product prices until the third quarter.

Windfall taxes on high crude prices also caused the operating profit for its exploration and production segment to fall 6% to CNY206.6bn in 2007 from the previous year, the company said.

Looking ahead, PetroChina planned to speed up the restructuring of its refining and chemical units to increase efficiency, it said.

Its projects, two 10m tonne/year refineries at Guangxi Petrochemical and Dalian Petrochemical, were in progress while the company has also started installing equipment at Dushanzi Petrochemical’s refinery and ethylene projects.

Refining and chemical projects in Fushun, Sichuan and Daqing were also under way, it said.

($1 = CNY7.08)

By: Florence Tan
+65 6780 4359

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