Chinesepod - Growth slows for PetroChina in 1st half

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BIZCHINA / Center

Growth slows for PetroChina in 1st half

By Wang Yu, Lillian Liu (China Daily)
Updated: 2007-08-24 10:14

China's top oil and gas producer witnessed slackening growth in the first
half of this year as a result of rising operating costs and lower crude
prices.

But PetroChina, Asia's top oil company by market value, still managed to
post a slim rise in net profit, beating analysts' forecasts of negative
growth.

From January to June, PetroChina's net income was up 1.4 percent to a
record 81.83 billion yuan from 80.68 billion yuan a year earlier, the
company said in a statement yesterday.

"It (the net profit figure) doesn't sound like much but it's actually a
very strong result since crude oil prices have gone down over the last
few months, and rising costs make it all the more difficult," said Castor
Pang, a strategist with Sun Hung Kai Financial Group, a securities
consulting firm in Hong Kong.

For the six months ended June 30, PetroChina recorded a turnover of
392.73 billion yuan, up 20.3 percent year-on-year. The half-year
operating profit reached 109.13 billion yuan, recording a decrease of 5.3
percent year-on-year.

"The decrease in operating profit was due to various factors including
the special levy imposed by the State, increased expenses for safety, the
company's business expansion and the surge in commodity prices,"
PetroChina said.

Witnessing a falling operating profit, PetroChina must have spared no
efforts to lower its financial expenses to maintain a positive net profit
growth, said Yin Xiaodong, an oil analyst at CITIC Securities Co.

According to PetroChina's statement, the increase in net profit primarily
resulted from the company's reassessment of its taxation position
following the requirements of the Corporate Income Tax Law.

PetroChina's refining and marketing segment achieved a turnaround during
the first half. The segment recorded an operating profit of 3.93 billion
yuan, representing an increase of 17.82 billion yuan over the same period
of 2006.

Since most of the crude for refining comes from PetroChina's own
production, the firm is less vulnerable in the face of rising global
crude prices and low prices of domestic oil products, according to
analysts.

PetroChina is positive about its business prospects in the second half of
this year.

"Crude prices remained at a good level in July. A rebound in prices will
fuel earnings growth for PetroChina in the second half," said Pang from
Sun Hung Kai Financial Group.

(For more biz stories, please visit Industry Updates)

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