China’s biggest oil company posted a record first-half profit as higher output offset lower crude prices and a slowdown in the nation’s economy.
(Bloomberg) — China’s biggest oil company posted a record first-half profit as higher output offset lower crude prices and a slowdown in the nation’s economy.
PetroChina Co.’s net income rose 4.5% to 85.3 billion yuan ($11.7 billion) in the six months through June from a year earlier, it said in an exchange filing. The company reported a 82.39 billion yuan profit in the first half of 2022.
The result was driven by a significant increase in sales of oil products, as well as gains in the natural gas segment, which offset declines in refining and chemicals, the company said in a statement.
The oil and gas major managed to post an increase in earnings in contrast to peers Sinopec and Cnooc Ltd., which saw profits shrink in the first half. Crude prices were 24% lower on average in the period than in the first six months of 2022.
PetroChina is a “key beneficiary” of discounted Russia crude and Beijing’s relaxation of gas price caps, Citigroup Inc. analyst Toby Shek said in a note before the results were announced.
Crude output rose 5%, while gas production climbed 6.7%. The profit from refining and chemicals slumped 24%. PetroChina is seeking to raise output to the equivalent of 1.73 billion barrels this year.
The firm cut spending to 85.1 billion yuan in the first half of the year, compared with 92.3 billion yuan in the first six months of 2022. That’s in line with the company’s full-year plan to lower spending by 11% to 243.5 billion yuan.
PetroChina’s parent company China National Petroleum Corp. cut its forecast in June for the nation’s full-year oil demand growth to 3.5%, down from an earlier estimate of 5.1%. China’s looming oil consumption peak and gloomy export and investment outlooks have sparked concerns over its oil demand recovery. Sinopec predicted slowing demand for oil products in the second half.
PetroChina sees downside risks for oil prices for the second half, but it said natural gas demand has improved and domestic consumption of refined products has gradually recovered.
(Updates with details throughout)
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