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PetroChina Achieves Significant Improvement of Operating Efficiency in the First Half of 2017

24 August 2017


PetroChina Company Limited (“PetroChina” or the “Company”, HKSE: 0857; NYSE: PTR; SSE: 601857) today announced that given the supply and demand of global oil market gradually balanced and with the wide range fluctuation of international oil prices, the average price during the period rose significantly in the first half of 2017 as compared to the same period in 2016. PetroChina grasped opportunities amid the increase of oil and gas prices as well as growing demand for natural gas, and took full advantage of the integration of the upstream and downstream businesses, strengthened the balance among production, refinery, transportation, marketing and trading segments and inventory management. In addition, the Company deepened reform and sustained innovation efforts, continuous optimization of production and enhancement of efficiency, resulting in the stabilization of production and operations, seeing significant increases in operating performance. In the first half of the year, the Company’s financial position remained stable and healthy, interest-bearing debts, debt-to-asset ratio and debt-to-capital ratio decreased, while cash flow was in good condition and free cash flow continued to stay positive.

For the six months ended 30 June 2017, based on the International Financial Reporting Standards (“IFRS”), the Company achieved revenue of RMB975.909 billion, representing a year-on-year increase of 32.0%. The net profit attributable to shareholders of the Company was RMB12.676 billion, representing a substantial increase of RMB12.145 billion compared to the same period in 2016. The basic earnings per share was RMB0.069, representing an increase of RMB0.066 per share compared to the same period in 2016.

Exploration and Production

In the first half of 2017, the Company insisted on discovering quality reserves that are quickly available for use and highly emphasized in pre-exploration and risk exploration. Precise exploration was carried out in old exploration regions. In addition, discoveries of a series of efficient reserves areas further consolidated the Company’s resources base. Old exploration regions of the Junggar Basin and Bohai Bay Basin achieved new breakthroughs, while production bases are newly constructed in Erdos Basin and Northern-west region of Sichuan Basin. Beside, natural gas exploration also achieved great breakthroughs in Tarim Basin and Qaidam Basin. Exploration of unconventional resources was carried out steadily. Output of domestic crude oil recorded 368.5 million barrels, down 4.4% year on year; marketable natural gas output was 1,608.8 billion cubic feet, up 5.3% year on year. Oil and gas equivalent output recorded 636.7 million barrels, down 0.5% year on year. For overseas business, the Company seized the strategic opportunities arose from “The Belt and Road Initiative” and actively promoted cooperation with international oil and gas enterprises, realizing new development progress in Central Asia and Middle East. Overseas oil and gas equivalent output recorded 89 million barrels, down 17.7% year on year.

For exploration and production segment, the Company strengthened its management and promoted technology upgrade. By means of adjustment to development strategies, adoption of innovative production model and enhancing industrialization, the Company applied stringent cost control measures and enhanced efficiency. The overseas business faced pressure of cost rebounding, thereby adopting integrated measures like investment optimization, re-negotiation of contracts and boosting sales volume and price, in order to maintain steady and effective development. Due to the increase of international crude oil price and domestic natural gas output, exploration and production segment’s operating profit recorded RMB6.916 billion, turning loss to a profit of RMB9.335 billion compared to the same period in last year.

Refining and Chemicals

In the first half of 2017, steady and balanced development was achieved in the refining and chemicals segment. The Company arranged production in a scientific manner. The Company maintained integration of refining and chemicals production, increased the processing workload of high-efficiency facilities and organized overhauls. In addition, the Company continued to optimize the production regimes and product structure, by increasing the output of high quality products such as high-octane gasoline and aviation kerosene. The diesel-gasoline ratio reduced to 1.33 in the first half, from 1.42 of the same period of 2016. The commodity amount of chemical products recorded at 11.684 million tons, representing a decrease of 1.1% year-on-year. Meanwhile, chemicals marketing swiftly responded to market changes by increasing the proportion of direct sales customers. In the first half of 2017, processed crude oil achieved 0.475 billion barrels, decreasing by 1.7% year-on-year. The output of refined oil achieved 43.284 million tons, down 0.3% year-on-year. As planned, the upgrade project of National VI gasoline and diesel standards proceeded smoothly, while the Yunnan Petrochemical project commenced trial production.

The Company strengthened cost controls and product structure, which led to improvements in major technical and economic indicators compared to the same period in last year, providing strong support to the Company’s earnings. The segment recorded a profit from operations of RMB15.837 billion. Among which, the refining business was affected by change in inventory and price floor policy of refined oil product, achieving an operating profit of RMB9.164 billion. For the chemicals business, the Company swiftly responded to market changes and enhanced the marketing of products, resulting in a profit from operations of RMB6.673 billion, representing a year-on-year increase of 10.3%.


In the first half of 2017, the Company proactively responded to unfavorable conditions such as excess domestic supply of resources and intensifying competition in the market by strengthening the linkage between production and sales, optimizing resources allocation, and expanding export of refined oil in order to ensure smooth production of refinery business. It continuously strengthened the core business of retail sales, push forward the diagnosing and treatment of low-margin stations, promoted the integrated marketing of refined products, fuel cards, non-oil business and lubricants, carried out various promotion activities, launched Wechat official account, third-party payment and smartphone APP. All these efforts resulted in an improved end-market sales capabilities. In terms of the international trading business, PetroChina put emphasis on synergies and leveraged its advantages of overseas oil and gas operating hubs. Moreover, the Company took proactive actions to develop high-end and high-profitability markets, and to optimize overseas oil and gas sales, which further enhanced international trade scale and operation quality. In the first half of 2017, the sales volume of gasoline, kerosene and diesel amounted to 81.622 million tons, representing a year-on-year increase of 7.0%.

Despite the slowing domestic demand of refined oil and intensifying market competition, PetroChina enforced stringent controls over costs and expenses for the domestic business of the marketing segment, expanded market network through multi channels and carried out a focused sales strategy, resulting in a fast-growing non-oil business serving as a new driver of business. In terms of international trading operations, the Company achieved continuous growth in scale by optimizing import of oil and gas resources and expanding exports of self-refined products. In the first half of 2017, the marketing segment realized an operating profit of RMB5,682 million, representing a year-on-year increase of 23.3%.

Natural Gas and Pipeline

In the first half of the year, PetroChina strengthened resources management and enhanced self-produced and imported gas structures in order to maintain a balance between production, transportation, sales and inventory. In addition, PetroChina continued to develop potential markets, by proactively exploring the Eastern and Southern-western high-end markets, and providing direct supply and direct marketing to major customers in Southern-eastern coastal cities. As a result, both the sales volume and efficiency of natural gas business demonstrated growth and optimization. In the first half of 2017, the sales volume of natural gas recorded 98.332 billion cubic metres, representing an increase of 14% compared to the same period in 2016. PetroChina steadily made progress on key projects of construction, including the second Sino-Russia Crude Oil Pipeline and the Fourth Shaanxi-Beijing Gas Pipeline, as well as accelerating the construction of the Fushun-Jinzhou-Zhengzhou Refined Oil Pipeline.

In response to increases in both prices and sales volume of natural gas, PetroChina optimized the sales strategy and resources allocation, further reduced integrated purchasing costs, maximized the marketing of business, and enhanced the operational efficiency of pipeline network. In the first half of 2017, the natural gas and pipeline segment realized an operational profit of RMB13.934 billion, representing a year-on-year increase of 21.9%.

Outlook for Second Half of 2017

Looking into the second half of 2017, the global economy is expected to continue to recover moderately and international oil prices to struggle at low levels. Geopolitics risks in certain resource countries will mount. The China economy will remain within a reasonable range while downward pressure is still high. The competition in the oil and gas market is becoming increasingly intensified. However, opportunities and challenges exist together. PetroChina will put greater effort in assessing the market trends and strive to seize favourable conditions arising from the “Supply-side Structural Reform” and the “Belt and Road Initiative” of China. With focuses on the two key business chains of oil and gas, the Company will leverage the advantages of the integration and consolidation of these two resources and markets. By means of optimizing resources allocation, linkage between production and sales, strengthening the balanced operations of business, as well as promoting different business drivers. The Company will strive to elevate its value and maximize efficiency. In addition, PetroChina is determined to achieve every production and operation target, and to promote the steady development of the Company.

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