OREANDA-NEWS. August 26, 2013. In the first half of 2013, PetroChina Company Limited ("PetroChina" or “the Company", HKSE: 0857; NYSE: PTR; SSE: 601857) continued to execute its three strategies - “Resources, Market and Internationalization”, and implemented the “Quality, Profitability and Sustainability” development policy.

The Company focused on its core business of oil and gas development, strengthened the overall balance of production, transportation, marketing and stockpiling, and set up the joint ventures and business cooperation platforms in response to the complex environment characterized by the persistently slow global economic recovery, China’s slowing economic growth and shrinking demand in the petroleum and petrochemical markets. As a result, the Company’s production and operations showed signs of steady improvement.

In the first half of 2013, the Company’s turnover was RMB1,101.096 billion, representing an increase of 5.2% as compared with the first half of last year. Under the International Financial Reporting Standards (“IFRS”), net profit attributable to the owners of the Company was RMB65.522 billion, which increased by 5.6% as compared with the previous year, with basic earnings per share of RMB0.36. As per resolution of the Board of Directors, the Company will distribute 45% of its interim net profit under the IFRS as an interim dividend, or RMB0.1611 per share (inclusive of applicable taxes).

Exploration and Production
Domestic oil and gas reserves continued to grow steadily. The Company continued to implement the “Peak Growth in Oil and Gas Reserves” Program, strengthened pre-exploration and venture exploration and pushed forward the exploration of tight oil and gas. Important exploration achievements were made in Gaoshiti-Moxi area in Sichuan Basin and Jiyuan area in Erdos Basin, and important discoveries were obtained in Tarim Basin, Junggar Basin, Bohai Bay Basin, Songliao Basin and Qaidam Basin.

Overall crude oil production remained stable, and natural gas production grew rapidly. The Company was active in transforming the mode of oilfields development, continued to conduct water injection projects management, took further actions to push forward secondary development and major development experiments, and accelerated capacity development in oilfields such as Daqing, Changqing, Xinjiang and the Southwest, which further strengthened the foundation for oil and gas fields development.

In the first half of 2013, the Company recorded crude oil output of 464.2 million barrels, representing an increase of 2.6% as compared with the same period in 2012. It also recorded a marketable natural gas output of 1,397.5 billion cubic feet, representing an increase of 8.1% as compared with the same period in 2012. The Company’s total oil and gas equivalent output amounted to 697.2 million barrels, representing an increase of 4.4% as compared with the same period in 2012. During the reporting period, due to the falling crude oil prices and rising costs, operating profit of the Exploration and Production segment decreased by 13.2% to RMB98.807 billion as compared with the same period in 2012.

Refining and Chemicals
The Company adhered to the principles of market orientation and profitability, arranged processing overload in a reasonable manner, and conducted maintenance of production facilities in a scientific way. It continued to optimize resources allocation and products structure and improved the steady operation of production facilities. As a result, the Company significantly reduced losses of the refining business and increased sales of petrochemical products.

The Company made new progresses in the construction of key projects. The project of Sichuan Petrochemical was ready for commissioning. The auxiliary project for processing sulphur oil of Guangxi Petrochemical and the fertilizer project of Ningxia Petrochemical started equipment installation. The preparation and construction of the projects of Guangdong Petrochemical, Yunnan Petrochemical and Huabei Petrochemical continued to proceed smoothly. Quality upgrading projects of refined products were carried out in full scale.

In the first half of 2013, the Company processed 499.0 million barrels of crude oil and produced 45.139 million tons of gasoline, kerosene and diesel, representing an increase of 1.9% and 3.0% as compared with the same period in 2012, respectively; the Company also produced 2.06 million tons of ethylene, representing an increase of 17% as compared with the same period in 2012. During the reporting period, due to factors such as the continued downturn in market demand, the Refining and Chemicals segment incurred a loss from operations amounting to RMB15.861 billion, representing a decrease in loss of RMB13.014 billion from that of the first half of 2012. Of this, loss of refining business was RMB7.769 billion, representing a year-on-year decrease in loss of RMB15.539 billion, due to the Company’s adherence to the principles of market orientation and profitability. Loss of Chemicals business was RMB8.092 billion, representing a year-on-year increase in loss of RMB2.525 billion.

Marketing
Facing the challenges of sluggish demand in the domestic refined oil market, the Company managed to operate its marketing business in a steady and orderly manner by continuing to optimize resources allocation, exercising flexibility in the organization of marketing activities and focusing on end customers and the sales of high value-added products. The sales of high-grade gasoline and aviation kerosene grew rapidly, and the fuel oil, lubricant oil and convenient store businesses continued to develop steadily. The Company further optimized its sales network and enhanced its ability to cope with market changes.

In the first half of 2013, sales of gasoline, kerosene and diesel amounted to 79.392 million tons, of which sales of gasoline increased by 15.7%, sales of kerosene increased by 22.4%, and sales of diesel increased by 3.3% as compared with the same period in 2012. The total number of operating service stations exceeded 20,000. Due to the weak demand for refined products, operating profit of the Marketing segment amounted to RMB3.428 billion, representing a decrease of 65.7% compared with the first half of 2012.

Natural Gas and Pipeline
The Company coordinated and balanced the utilization of domestic and overseas resources and enhanced the domestic production and supply potential for its natural gas business. The Company also improved the gas storage and LNG peak shaving capabilities, optimized the operation of pipeline network, strengthened the management of the demand side, and pushed forward the development of new pipelines and high-profitability market in a well-organized manner, thus ensuring sales profitability.

The construction of key oil and gas pipelines progressed steadily. The Second West-East Pipeline commenced gas supply to Guangxi and Hong Kong. The Horgos-Urumqi section of the west section of the Third West-East Pipeline was put into operation. The Nanbu-Tongliang section of the Zhongwei-Guiyang Pipeline was jointed up. Construction of the Shandong Pipeline Network, the Jinzhou-Zhengzhou refined products pipeline and the Tangshan LNG terminal proceeded as planned. Meanwhile, the Company broke new ground with a financing mode through joint ventures and business cooperation. It contributed certain pipeline assets and operations to the joint venture and introduced in such capital as insurance and industrial funds, with an aim of achieving light-asset operations and sustainable development of its oil and gas businesses.

In the first half of 2013, the Company sold 47.877 billion cubic meters of natural gas, representing an increase of 9.8% as compared with the same period in 2012. By strengthening international cooperation, introducing in strategic investors, setting up joint ventures for gains as well as effectively balancing the domestic gas and imported gas, controlling the pipeline transmission costs in a scientific manner and striving to increase the sales volume and profitability, the Company achieved an operating profit of RMB21.882 billion, representing an increase of RMB20.245 billion as compared with the same period in 2012. During the reporting period, sales of imported gas recorded a loss of RMB23.52 billion.

Overseas Business
Facing challenges such as the complex and volatile geopolitical environment and policy adjustments in resource-rich countries, the Company strengthened overall planning and coordination in production, carried out oil and gas exploration in a well-organized manner and accelerated capacity building for key projects for its overseas oil and gas operations. As a result, the Company achieved an oil and gas equivalent output of 67.5 million barrels, representing an increase of 8.0% as compared with the same period in 2012. This accounted for 9.7% of the Company’s total oil and gas equivalent output, reflecting a steadily-growing contribution to the Company. As for the development of new projects, the Company acquired from ConocoPhillips Company a 20% interest in Poseidon natural gas project in the off-shore Browse Basin and a 29% interest in the shale gas project in the on-shore Canning Basin in west Australia.

The international trading business of the Company continued to develop at a relatively fast pace. The Asian oil and gas operating center continued to improve its operations, significantly raising its market competitiveness and influence as a result. The European oil and gas operating center continued to consolidate its businesses, with the inland sales volume and profitability achieving growth amid a downward market environment. The Company expedited construction of the American oil and gas operating center, with the trade volume in this region continuing to increase. 

In the first half of 2013, the Overseas Business segment (Note) achieved a turnover of RMB368.064 billion and profit before taxation of RMB12.08 billion, which comprised 33.4% and 12.9%, respectively, of the total equivalent for the Company.

Outlook
In response to the complex and severe macro-economic situation in the second half of 2013, PetroChina will firmly adhere to a stable growth pattern in its businesses. It will prioritize the development of domestic upstream business, expedite the development of natural gas business, develop overseas business on a scale and quality basis, develop refining and chemicals business effectively and at a proper scale, and expand marketing business steadily and orderly. Through these efforts, the Company’s core competitiveness can be strengthened and full year operating targets are expected to hit.

Note: The four operating segments of the Company are namely Exploration and Production, Refining and Chemicals, Marketing as well as Natural Gas and Pipeline. Overseas Business does not constitute a separate operating segment of the Company. The financial data of Overseas Business are included in the financial data of the respective operating segments mentioned above.

SAFE HARBOR STATEMENT
 
This press release contains forward-looking statements. These statements constitute "forward-looking" statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, and as defined in the U.S. Private Securities Litigation Reform Act of 1995. These forward-looking statements include the outlook of China’s economy, the prediction of the development of Chinese governmental policy for the petroleum industry and the actions the Company plans to take to achieve its production and operational objectives. Forward-looking statements involve inherent risks and uncertainties and actual results may differ materially from such estimates depending on future events and other changes in business climate and market conditions. PetroChina disclaims any obligation to update or correct any forward-looking statements.