OREANDA-NEWS. September 01, 2011. PetroChina Company Limited ("the Company", HKSE: 0857; NYSE: PTR; SSE: 601857) announced today that in the first half of 2011, it closely monitored and analyzed the complex macro-economic situation, adhered to the three strategies of “Resources, Market and Internationalization”, achieved “Green, International and Sustainable” development, coordinated both domestic and overseas markets and resources, focused on the development of the oil and gas operations, strengthened investment and cost control, bolstered safety and environmental protection, and reinforced the integrated balance of production, transportation, marketing and storage, all of which led to stable and rapid growth in production and operation, and steady growth in operational efficiency, reported the press-centre of PetroChina.

In the first half of 2011, against the backdrop of strengthened control over domestic oil prices and tightened macro-economic policies, the Company  fully leveraged its comprehensive business integration advantages and overcame challenges that led to losses in the refining business. Under China Accounting Standards (“CAS”), net profit attributable to the equity holders of the Company during the period increased 1.2% to RMB66,006 million from the same period of last year with basic earnings per share of RMB0.361. Under International Financial Reporting Standards (“IFRS”), profit attributable to the owners of the Company increased 1.0% to RMB66,007 million from the same period of last year with basic earnings per share of RMB0.361.

Exploration and Production
Domestically, the Company remains committed to conducting comprehensive geological studies and integration of exploration and development, with an emphasis on oil and gas exploration technology. A number of encouraging discoveries were made in places such as Northern China, Erdos, Tarim, and Qinghai. Efforts were also made to strengthen oil and gas production management and to fully exploit the potential of existing fields. Meanwhile, the Company continued to step up the commissioning of new fields and implemented output increase measures to achieve steady operation. Steady progress was made in respect of unconventional oil and gas businesses while the construction of production bases was sped up. The proven reserves and production of coal-bed methane increased rapidly whilst work on the industrialization of shale gas production in pilot areas was fully implemented.

In the first half of 2011, crude oil output reached 446 million barrels, representing an increase of 5.0% from the same period of 2010, the strongest increase in recent years. The output of marketable natural gas of the Company grew steadily to 1,185.9 billion cubic feet, representing an increase of 5.3% from the same period of 2010. The total oil and gas output of the Company amounted to 644 million barrels-of-oil equivalent, representing an increase of 5.1% from the same period of 2010. The Company grasped opportunities in respect of the persistently high crude oil prices and strengthened cost controls. As a result, the Exploration and Production segment  generated RMB103,684 million in profit from operations, representing an increase of 41.3% from the same period of the preceding year. The segment continues to be the major profit contributor to the Company.

Refining and Chemicals
Impacted by persistently high crude oil prices and with prices of domestic refined products falling behind, the Company fully explored market opportunities, optimised the allocation of resources, improved the management of its operations, strived to improve its refining utilisation ratio and implemented energy-saving measures in order to boost its production and revenue. As a result, the Refining and Chemicals segment achieved a historically record high result in terms of major operational indicators in respect of the refining yield and the overall refinery energy consumption.

To cope with the complex environment involving fierce competition, poor demand and shrinking gross profit, the Chemicals business optimised its production plans in chemical operations and resources allocation, organised product transportation in an effective manner, and benefited from its development and marketing efforts in high value-added chemical products as well as cost reduction and efficiency enhancement. The Company moved forward on the construction of key refining and chemical projects in an orderly manner, made new progress in strategic structural adjustment and further enhanced its refining capacities.

The installations of atmospheric and vacuum distillation at Liaoyang Petrochemical were completed and have now become a 10 million-ton refinery base for processing oil mainly from Russia. Meanwhile, progress was made as planned with projects such as the large scale ethylene projects at Daqing Petrochemical, Fushun Petrochemical and Sichuan Petrochemical.

In the first half of 2011, 491 million barrels of crude oil were processed, representing an increase of 11.9% from the same period of 2010. Approximately 43.393 million tons of gasoline, kerosene and diesel were produced, representing an increase of 13.1% from the same period of 2010. About 10.07 million tons of commercial chemical products were produced, representing an increase of 11.2% from the same period of 2010. The ethylene output amounted to 1.819 million tons, representing an increase of 0.6% from the same period of 2010. Impacted by persistently high international crude oil prices and the prices of domestic refined products falling behind, the Refining and Chemicals segment incurred a loss of RMB20,993 million from operations for the six months ended June 30, 2011, representing a decrease of RMB26,451 million from the same period of last year.

The Refining business accounted for a loss of RMB23,358 million from operations, representing a decrease of RMB26,345 million from the same period of last year. The chemicals business overcame the unfavourable market conditions and optimised its resources allocation, cost reduction and efficiency enhancement. As a result, the chemical business contributed a profit of RMB2,365 million from operations, which is flat from that of the same period in the preceding year.

Marketing
The Company devised effective marketing strategies attuned to the market changes, reinforced resources allocation through various channels, and enhanced quality and metering management of refined products. More efforts were devoted to improving the sales structure and quality, and to deploying additional resources to highly effective market. The average daily sales volume of refined products reached a historical record and the Company's market share in the domestic retail market further increased to 38.9%.

In the first half of 2011, 765 service stations were newly developed, out of which 361 stations were put into operation. Six oil tank farms were completed. The Company sold 66.793 million tons of gasoline, kerosene and diesel, representing an increase of 12.2% from the same period of 2010. Domestic sales of gasoline, kerosene and diesel amounted to 55.372 million tons, representing an increase of 12.4% from the same period of 2010. The Marketing segment took advantage of market opportunities and organized effective marketing activities. As a result, the performance in this segment was improved, resulting in a profit of RMB13,594 million from operations, an increase of 80.5% from the same period of the preceding year.

Natural Gas and Pipeline
Construction of strategic oil and gas passways and major pipeline network were accelerated. The west and east sections of the Second West-East Gas Pipeline were completed put into operation, which marked a milestone in the Company’s effort to expand to highly effective natural gas markets. This will optimize energy structure and promote energy conservation, emissions reduction and green development. The Qinhuangdao-Shenyang Gas Pipeline was fully completed. The construction of the Lanzhou-Chengdu Crude Oil Pipeline progressed smoothly. The commissioning of Jiangsu LNG project was successful while both the Dalian LNG and Tangshan LNG projects progressed as planned. These developments effectively contributed to the diversity of natural gas resources. With well organized domestically produced and imported nature gas, the Company continued its efforts to develop new markets, in particular high-end markets for the sales of natural gas. A double-digit growth in the sales volume of natural gas was achieved over the same period last year.

In the first half of 2011, the Natural Gas and Pipeline segment continued to strengthen the overall balance of production, transportation, marketing and storage which helped ensure the completion of all production and operation targets. As a result, the Natural Gas and Pipeline segment realised a profit of RMB10,730 million from operations in the first half of 2011. However, due to an increase in loss caused by a rise in imported natural gas as well as greater depreciation due to the transfer from construction in progress to fix assets in respect of certain key projects during the same period, profit from operations decreased by 4.3% from the same period of the preceding year.

International Business
The Company further intensified its cooperation with international oil companies and resources host countries and overseas oil and gas production also grew rapidly. In particular, the Rumaila project in Iraq became the first project to enter the investment and cost recovery stage amongst all projects tendered in post-war Iraq. The Company’s share of oil and gas output in Rumaila amounted to 6.90 million barrels in the first half of the year. The Halfaya Project nearly completed its early preparation for achieving the initial commercial output.

In terms of international trade, fluctuations in oil prices were monitored closely. Various measures in trading were adopted to obtain long-term and stable resources from the Middle East, South America and Russia, etc. The oil and gas operation centre in Asia performed well in trading, processing, storage and transportation. Substantial progress was made in the development of an oil and gas operation centre in Europe. The setting up of joint ventures engaged in trading and refining was accomplished. These new developments have further strengthened the Company’s ability to allocate resources globally.

 In the first half of 2011, the Company’s overseas oil and gas equivalent output amounted to 61.9 million barrels-of-oil equivalent, representing an increase of 22.3% from the same period of 2010 and accounting for 9.6% of the Company's aggregate oil and gas equivalent output. Contribution from the Company’s international business increased steadily.

Outlook
In the second half of 2011, the uncertainty and instability of the global economic recovery may become more severe, while the global financial markets and crude prices may see greater fluctuations. In view of the complicated and challenging macroeconomic situation in China, the Company will follow the rules of achieving “stable, balanced, efficient, controlled and coordinated” operations, proactively prevent operational risks, implement steady and flexible marketing strategies, and develop new capabilities so as to enhance the growth capability of the Company, while ensuring all production and operation tasks of the year can be accomplished in order to continuously improve the returns to its shareholders.