PetroChina Announces 2008 Interim Results

Source: 8/27/2008, Location: Asia

PetroChina announced that the Company recorded consolidated net profit attributable to equity holders of the Company of RMB53.62 billion for the six months ended 30 June 2008, representing a decrease of 34.5% compared to the same period last year. Earnings per share was RMB0.29, approximately RMB0.17 lower than that for the same period last year. The Board of Directors of the Company proposed to pay an interim dividend of RMB0.131827 per share, based on 45% of the interim net profit attributable to equity holders of the Company for six months ended 30 June2008.

Mr. Zhou Jiping, Vice Chairman and President of PetroChina, indicated that since the beginning of this year, in the face of macro-environment changes both at home and abroad, PetroChina has firmly adhered to the policy of placing development as its top priority. The Company will continue to implement the three main strategies in the areas of resources, marketing andinternationalisation of operations. PetroChina overcame the difficult operating environment amidst natural disasters of icy snow in parts of China as well as a severe earthquake in Sichuan province and ensured stability with its production and operating activities. The Company’s financial performance was adversely affected by factors including the increase of special levy on domestic oil production, refined products prices below the international level and the hike in raw materials cost. However, the Company has been able to maintain a healthy and stable development in production and operations with stringent management initiatives, structural optimization, technical innovation and improved efficiency.

Exploration and Production
In the first half of this year, the Company achieved satisfactory results through dedicating stronger efforts in implementing high reserve growth programs, strengthening its foothold in key basins and focusing on key prospecting and reservoir evaluation. The Company made new progress in gas exploration in Sichuan Basin and successfully expedited the concentrated exploration program in Longgang Area. We also made significant progress with the exploration work at Erdos Basin, Bohai Bay Basin, Junggar Basin and Tarim Basin. As a result, the Company has maintained the growth trend of oil and gas reserves and built a more solid resource foundation.

The Company actively adopted new methods in the exploration of oilfield, slowed down the production decline in mature oilfields and accelerated the construction of production facilities so as to ensure balanced and effective production. In the first six months of this year, the total crude oil and natural gas output achieved rapid growth, up to 588 million barrels of oil equivalent,representing a year-on-year increase of 6.5%. Crude oil totaled 435 million barrels, a year-on-year increase of 3.5% while marketable natural gas totaled 923 billion cubic feet, a year-on-year increase of 15.7%.

The development of new energy and unconventional energy is proceeding as planned. The development of coal-bed methane and fuel ethanol are making good progress.

During the period under review, the Exploration and Production segment continued to be a major profit contributor and recorded an operating profit of RMB130.23 billion, an increase of 35% compared to the same period last year.

Refining and Marketing
Taking into account the strong demand against a weak supply situation, the Company speeded up the strategic adjustment of refining structures to improve the quality of the products and ensure stable supply. During the period under review, the Company’s refineries processed 425 million barrels of crude oil, representing a year-on-year increase of 4.3%. The Company produced 11.86million tons of gasoline and 1.13 million tons of kerosene, an increase of 11.2%, and 14.3% respectively over the same period last year. 23.8 million tons of diesel oil were produced which is around the same level for the same period last year. Construction of the new ten-million-ton sulphur-bearing crude oil processing facilities by PetroChina Dalian Petrochemical Company hascompleted while construction of the large-scale petrochemical refinery projects in Dushanzi, Fushun and Guangxi is making satisfactory progress.

The Company has further improved the sales network by developing high efficient markets and optimizing operational efficiency and market supply capabilities. Sales of refined oil products totaled 44.41 million tons, of which retail sales accounted for 31.84 million tons, up 29.1% year-on-year.

During the period under review, as a result of the macro-economic controls of oil product price, the Refining and Marketing segment recorded an operational loss of RMB59.02 billion. This segment is still the main source of external sales income for the Company.

Chemicals and Marketing
The Chemicals and Marketing segment achieved an established, efficient, safe and stable operation. All the key technical and economic indicators improved consistently and resource allocation and product mix were further optimized. The production of chemical products for the first half of this year was 8.16 million tons, a year-on-year increase of 4.2% while the output of ethylene was 1.32 million tons, an increase of 1.1% compared to the same period last year. The output of synthetic resin was 2.04 million tons, increased by 2% year-on-year; Output of synthetic fiber raw materials and polymer was 0.88 million tons, increased by 25.2% year-on-year and the output of urea was 2.05 million tons, increased by 7.9% when compared to the same period last year.

During the period under review, the Chemicals and Marketing segment realized increase of production, sales and efficiency, with operating profit of RMB6.71 billion, representing a year-on-year increase of 24.4%.

Natural Gas and Pipeline
Construction of oil and gas storage and transportation projects progressed smoothly and sales volume of natural gas recorded robust growth. The Second West-East Gas Pipeline Project had officially commenced construction which would be significant in maintaining the Company’s competitive edge in the Yangtze River Delta region and strategically entering the market in the Pearl River Delta region. In addition, the construction of key projects including the Lanzhou - Zhengzhou - Changsha refined oil pipeline, Yongqing - Tangshan - Qinhuangdao natural gas pipeline and LNG projects in Dalian and Jiangsu have fully commenced. The construction of Daqing - Qiqihar gas pipeline has been completed and is ready for operation. Acquisition of Chang-Ning pipeline has completed, enabling the link up of the Qinghai gas field and Changqing gas field. Safe and stable gas supply in the pipeline network is further enhanced. In natural gas marketing, we leveraged on the completed pipeline network which the Company managed to balance production, transportation and marketing, and at the same time realized safe and stable supply to major cities, public utilities and major industrial users.

During the period under review, the Natural Gas and Pipeline segment grew rapidly attributable to the increase of price and sales volume. As the Company’s new growth driver, the operating profit of the segment was RMB8.4 billion, a year-on-year increase of 37%.

International Business
Contribution from the Company’s international business segment grew during the period under review. Overseas oil and gas net production reached 43.1 million barrels of oil equivalent, up 48.6% year-on-year and accounting for 7.3% of our total production. Overseas oil and gas trade volume was 22.89 million tons, up 77.6% year-on-year.

Prospect for the Second Half of 2008
Looking ahead, the Company will continue to uphold the guideline of “stable, balanced, efficient, controlled and harmonious”, organize production and operation scientifically, make progress in science and technology, strengthen corporate management and fulfill all targets for this year. TheCompany will try its best to enhance the corporate value and reward the support of the shareholders, the society and the staff.

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