OREANDA-NEWS. September 02, 2014. PetroChina Co. , China's biggest listed oil company by capacity, posted a 4% increase in its first-half profit, helped by improved results at its refining and chemicals businesses. Beijing-based PetroChina's refining margins have improved since last year after Beijing implemented pricing overhauls, which linked oil-product prices more closely with international prices.

Oversupply and sluggish chemicals demand weighed on profit in the first quarter, but the second quarter picked up, the company said. PetroChina's profit for the six months ended June 30 rose to 68.1 billion yuan (USD11.1 billion) from 65.5 billion yuan a year earlier. Losses in its refining and chemicals segment, narrowed to 3.4 billion yuan from 15.9 billion during the period. The oil giant's stronger earnings outperformed smaller rival Cnooc Ltd. , which posted a 2.3% decline in profit to 33.59 billion yuan for the same period on rising operating costs.

PetroChina's results were similar to China Petroleum & Chemical Corp. , known as Sinopec, which reported an 8% increase in first-half profit on Friday. Sinopec, the country's largest refiner, also said an oversupply of chemicals in the domestic market weighed on profit despite improvements in the refining business. PetroChina's operating profit from its natural-gas and pipeline business in the first half fell 81% year-to-year to 4.1 billion yuan, in part because it needed to procure expensive natural-gas imports to meet rising demand.

The company has lost billions of dollars from selling imported natural gas at deep discounts in the past few years. Analysts expect PetroChina to report stronger results in the second half of the year on the back of a natural-gas price increase and potential gains from asset sales. China will raise the price of natural gas sold to businesses by about 18% from Sept. 1. The company said Thursday that the price increase would "improve the group's financial position and operating results in the future." At a news conference, Wang Dongjin, the company's vice chairman and president, provided an update on PetroChina's operations in Iraq.

The company has interests in four oil fields in Iraq and operates two of them but until now hasn't provided a detailed update on how these fields are being affected by recent attacks inside the country by Islamic State extremists. Mr. Wang said Iraq was expected to contribute about 50 million metric tons, or about one million barrels a day, to PetroChina's overseas output this year. "Amid this turmoil, we have maintained normal production and existing operation of our fields," he said, adding that 1,500 expatriate workers have been evacuated since the fighting began. Moving forward, he said two of its Iraqi fields—Rumaila and West Qurna-1—will see a "slight decrease" in production this year because of the fighting but that "hopefully production…will pick up in the fourth quarter." Meanwhile, PetroChina is also in the process of divesting part of its natural-gas pipeline business as part of Beijing's efforts to overhaul state-owned companies and encourage a mixed-ownership economy.

The decision comes after Sinopec said it would sell as much as 30% of its fuel-marketing business to outside investors. Mr. Wang said selling the pipeline business was "much more complicated" than selling the fuel-marketing business and that the company was still internally assessing the quality of the assets and seeking internal and government-regulatory approval. He declined to provide a timetable for the sale.