OREANDA-NEWS. April 06, 2012. PetroChina Company Limited ("PetroChina" or “the Company", HKSE: 0857; NYSE: PTR; SSE: 601857) announced that facing the complex and changing macro-economic environment in 2011, the Company maintained scientific production and operations, improved cost controls, promoted fine management, and accelerated the transformation of its development mode. As a result, the Company grew steadily and its value increased steadily while production proceeded at a stable and orderly pace and its structure continued to improve in a consistent manner. Moreover, the Company’s resource base expanded in a stable manner, and the basis for sustainable development has been reinforced, reported the press-centre of PetroChina.   

As of 31 December, 2011, according to both the International Financial Reporting Standards (“IFRS”) and the China Accounting Standards (“CAS”), the Company achieved turnover of RMB2,003,843 million, representing an increase of 36.7% as compared with last year. However, due to macro regulations and controls over the prices of domestic refined products, the selling price of the imported natural gas is lower than that of the import price and the substantial increase in taxes and levies.

Under the IFRS, profit attributable to the owners of the Company realized in 2011 was RMB132,961 million, representing a decrease of 5.0% as compared with the previous year; basic earnings per share was RMB0.73, representing a decrease of RMB0.03 from the preceding year. Under the CAS,  profit attributable to the owners of the Company realized in 2011 was RMB132,984 million, representing a decrease of 4.9% as compared with the previous year; basic earnings per share was RMB0.73, representing a decrease of RMB0.03 from the preceding year.

As per the Board of Director’s resolution, the Company will distribute 45% of its net profit under IFRS as final dividends for 2011. The proposed final dividend per share is RMB0.16462 (inclusive of applicable taxes). The proposed total dividend for 2011 is RMB0.32691 (inclusive of applicable taxes), including the interim dividend of RMB0.16229 per share (inclusive of applicable taxes) for 2011. The Company will continue to commit tireless efforts to bring good returns to its shareholders.

Exploration and Production

The Company continued to implement the “Peak Growth in Oil and Gas Reserves” Program. A number of significant discoveries and breakthroughs were made in major exploration areas. A geological oil reserve of 100 million tons situated at Qaidam Yingdong Formation was newly added to the Company’s controlled reserve, laying the foundation for the Company to locate quality large-scale reserves in the southwestern part of the Qaidam Basin. Newly controlled geological reserves were discovered in western and southern Jingbian as a result of natural gas exploration in the Erdos Basin, presenting new prospects for Lower Paleozoic Exploration. Achieved eight reserves with scales of over 100 million tons, including Jiyuan area in Erdos Basin, Tabei area in Tarim Basin and Xujiahe area of Sichuan Basin; 4 reserves with scales of over 50 million tons, including the North Kulun fault-step belt in Qiadam Basin, Damingtuen buried hill reservoir in Bohai Basin and the northern area of Songliao Basin.
  
The Company continued to carry out the “foundation year” activities for the development of oilfields and special arrangements in relation to water injection. Major development indicators of the existing oilfields continued to improve, including the effective control over the rise of composite water cut, which further strengthened the basis for the stable production of existing oilfields. Intensified efforts were made to improve production capacity in new oilfields, such as the optimization of technology roadmaps for development and the continuing standardization of ground level construction. At the Daqing Oilfield, the Company successfully overcame intensified development difficulties and the impact of other unfavorable factors. The Company speeded up the transformation of the development mode for the oilfield and optimized the allocation of resources for its development. Following 27 consecutive years of stable production of over 50 million tons of crude oil, 2011 was the ninth consecutive year of stable production of Daqing, with an annual output of over 40 million tons of crude oil. At the Changqing Oilfield, the Company carefully organized production and operations and focused on raising development capacity. As a result, the annual oil and natural gas equivalent output in Changqing Oilfield reached 40.60 million tons in 2011 and achieved a historic leap-forward.

Based on the independent reserve appraiser’s evaluation, the replacement ratio of oil and gas equivalent reserves for 2011 was 1.03. The Company’s total crude oil output reached 886.1 million barrels, representing an increase of 3.3% as compared with last year. Output of marketable natural gas reached 2,396.4 billion cubic feet, representing an increase of 7.9% as compared with last year. The oil and natural gas equivalent output amounted to 1,285.6 million barrels, representing an increase of 4.7% as compared with last year.

In 2011, the Exploration and Production segment transformed the mode of development and continued to step up cost controls while crude oil prices remained high. As a result, the Company’s profitability improved further; profit from operations was RMB219,539 million, representing an increase of 42.8%.

Refining and Chemicals

The Company’s refining and chemicals businesses followed the market direction in adjusting its product structure. The Company coordinated and optimized the allocation of resources, strengthened management over production operations, and implemented precision management by carrying out management of benchmark indicators. Major technological and economic indicators continued to improve. In particular, light products yield and ethylene yield of the Company maintained their leading positions in China. Sales of chemicals products followed market demand. Meanwhile, the Company increased the production of chemicals products which best met market demand, lowered production costs and improved profitability. In 2011, the Company’s refineries processed 984.6 million barrels of crude oil and its crude oil processing load amounted to 92.0%. The Company produced 87.15 million tons of gasoline, kerosene and diesel.

The Company steadily pushed forward the strategic structural adjustment of its refining and chemicals operations. The alteration and expansion of the refining project at Liaoyang Petrochemical, the capacity upgrade of the refining project at Ningxia Petrochemical, and the upgrade of the quality of oil products at Karamay Petrochemical and Jinzhou Petrochemical were completed and became operational. In addition, construction of the principal facilities of the refining project at Fushun Petrochemical, which has a capacity of 10 million tons, was completed. Preliminary works at Guangdong Petrochemical and Yunnan Petrochemical have reached the targeted stage of progress.

Due to the fact that international crude oil prices remained high, the macro regulations and control over the prices of domestic refined products and the decline in demand in the petrochemical market, the Refining and Chemicals segment recorded operating losses of RMB61,866 million for 2011. Of this, the refining operations and the chemicals operations recorded operating losses of RMB60,087 million and RMB1,779 million for 2011.

Marketing

As a result of the accurate assessment of market trends complemented by a scientifically devised marketing strategy, the efficient allocation and deployment of resources, the active optimization of sales structure as well as efforts to increase the proportion of retail sales, the Company’s sale of refined products improved further and profitability was enhanced. The Company’s market share in the domestic retail market reached 39.2% in 2011, representing an increase of 0.8 percentage point as compared with last year and reflecting a steady increase in the Company’s market share.

With continuing emphasis on developing its marketing network, the Company steadily pushed forward the building of high-performance and strategic markets, including the construction of service stations in urban areas and expressways. As a result, more than 1,300 new service stations were developed in the year, bringing the total number of service stations to 19,362. Due to the emphasis on product quality and quantitative management, 37 sales and marketing enterprises of the Company passed the ISO9000 certification in 2011. In 2011, the Company sold 146 million tons of gasoline, diesel and kerosene, representing an increase of 20.4% as compared with last year.

In 2011, the Marketing segment promptly took advantage of opportunities presented by the market and organized its marketing efforts in a scientific manner. It expanded sales and improved the quality of its marketing efforts. Profit from operations was RMB20,653 million for 2011, representing an increase of 29.4% as compared with last year.

Natural Gas and Pipeline

The Company accelerated the construction of oil and gas strategic passways, domestic trunk pipeline networks and storage facilities. The trunk line of the Second West-East Gas Pipeline was completed and became operational in June 2011. The pipeline primarily brings in natural gas from Central Asian countries such as Turkmenistan and Kazakhstan. The trunk line of the Second West-East Gas Pipeline has been linked up with various existing pipelines, forming a natural gas pipeline network in China. The pipeline network is of critical importance to ensuring the supply of energy, the optimization of the energy structure, and the promotion of energy conservation, emissions reduction and hence green development. Jiangsu and Dalian LNG began to supply gas to the West-East Gas Pipeline Network and the northeast China. These contributed strongly to the adjustment of the regional energy structure and the realization of the diversification of natural gas sources.

The Company’s natural gas sales efficiently balanced the two kinds of resources of domestically produced gas and imported gas. The Company strengthened the connections between production, transportation and marketing. The operation of the Company’s pipeline network, as well as the allocation of resources, was optimized to ensure a safe and stable supply of gas to the market. The coverage of the natural gas supply has been extended to include Jiangxi Province and Guangdong Province. The Company’s natural gas utilization business progressed effectively, and the sales volume of natural gas maintained rapid double-digit growth.

Profit from operations of the Natural Gas and Pipeline segment in 2011 was RMB15,530 million, representing a decrease of 23.9% from RMB20,415 million in 2010. This was a result of an increase in losses on imported gas and the impact of higher depreciation in respect of the capitalization of key projects at the same time. Among others, the sale of imported natural gas and LNG recorded a cumulative loss of approximately RMB21,400 million.

Overseas Oil and Gas

The Company further expanded its overseas cooperation. The strategic layout of five major oil and gas cooperation zones was basically completed. Overseas cooperation gradually extended towards combining oil and gas development, integrating upstream and downstream operations as well as developing non-conventional oil and gas projects. As a result, the international operations of the Company have entered a new phase of effective and large-scale development. The Company has started to recover its investment and expenses in Rumaila Project in Iraq, which is in cooperation with BP, and has begun to ship back crude from this project. It has an average output of 1.19 million barrels per day.

The Halfaya Project also proceeded smoothly. Construction of seismic, drilling well and ground output facilities were carried out at full speed. The Company’s Arrow Project in Australia proceeded in an orderly pace. The Company also entered into an agreement in September 2011 to acquire Bow Energy Limited, a company engaged in coal seam gas exploration and development. In 2011, the Company’s overseas oil and natural gas equivalent output reached 120.8 million barrels, representing an increase of 18.2% as compared with last year and reflecting a marked increase in the contribution of international operations to the Company’s results.

With the three major oil and gas operating hubs in Asia, Europe and the Americas, the Company mapped out its global trading network and constantly diversified its trading practices. It also pushed forward with the construction of storage facilities and further improved its internationalized operating capacity. The oil and gas operating hub in Asia is nearing completion and is effectively serving the four functions of trading, processing, storage and transport in one entity. Both Singapore Petroleum Company (SPC) and Osaka International Refining Company have sound operation. With the completion of the deal with INEOS Group Holdings plc. to set up a trading joint venture and a refining joint venture, the Company’s plan to build an oil and gas operating hub in Europe has made significant progress. In 2011, the Company’s international trading volume reached 147 million tons. The scale and profitability of the crude oil, natural gas and refined oil trading businesses achieved substantial growth.

In 2011, the Company’s overseas operations(note)* produced notable results and further increased their contribution to the Company. Turnover of overseas operations amounted to RMB574,212 million, or 28.6% of the Company’s total turnover. Profit before income tax of the overseas operations amounted to RMB34,747 million, or 18.9% of the Company’s profit before income tax.

Outlook for 2012

In 2012, facing new challenges and opportunities, the Company will continue to carry out the three strategies of resources, market and internationalization, and will focus prominently on the development of its core businesses, maintain steady and rapid growth in its production and operations, and accelerate the transformation approach for development. Moreover, the Company will pay more attention to improving the quality and efficiency of its development, focus on technological and management innovation, and enhance safety and environmental stability. Through this approach, the Company may be able to meet the business objectives defined by the Board of Directors, improve its growth capacity continuously, strengthen its international competiveness and achieve sustainable development.

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