PetroChina Q4 net disappoints
By Suilee Wee |
March 26, 2010, Friday
|
Print Edition
Print Edition
PETROCHINA, the world's most valuable oil and gas producer, said China could delay fuel-price hikes needed to keep earnings healthy as it posted a lower-than-forecast 12 percent gain in quarterly profit due to higher costs.
PetroChina's weak downstream results set an ominous tone for Sinopec, China's largest refiner, which is expected to report its weakest earnings in five quarters on Sunday.
Unlike refining peers Thai Oil and India's Reliance Industries which earn market-driven margins, PetroChina and Sinopec suffered in the fourth quarter of last year as they were trapped between rising crude prices and low, state-capped domestic fuel prices.
"It's disappointing," said Neil Beveridge, senior oil analyst at Sanford Bernstein. "Upstream earnings appear to be weaker than expected as a result of higher operating expenses."
The company said China was unlikely to implement fuel price hikes in the near term due to worries over inflation, adding that its refining operations can still be profitable as long as crude oil stays about US$80 per barrel.
Chairman Jiang Jiemin also said he was confident natural gas price reform will occur this year, though the timing of such reform is uncertain.
"As you know, our Consumer Price Index rise was recently 2.7 percent, and our full-year target is 3 percent," Jiang said, referring to China's CPI. "So I don't think an adjustment to fuel prices will come soon."
The company said it would strive to achieve faster growth in its overseas oil and gas businesses, better allowing it to control costs by having its own production resources.
To that end, PetroChina recently invested in Australia's burgeoning coal-seam gas industry by bidding for Arrow Energy together with Shell.
PetroChina's weak downstream results set an ominous tone for Sinopec, China's largest refiner, which is expected to report its weakest earnings in five quarters on Sunday.
Unlike refining peers Thai Oil and India's Reliance Industries which earn market-driven margins, PetroChina and Sinopec suffered in the fourth quarter of last year as they were trapped between rising crude prices and low, state-capped domestic fuel prices.
"It's disappointing," said Neil Beveridge, senior oil analyst at Sanford Bernstein. "Upstream earnings appear to be weaker than expected as a result of higher operating expenses."
The company said China was unlikely to implement fuel price hikes in the near term due to worries over inflation, adding that its refining operations can still be profitable as long as crude oil stays about US$80 per barrel.
Chairman Jiang Jiemin also said he was confident natural gas price reform will occur this year, though the timing of such reform is uncertain.
"As you know, our Consumer Price Index rise was recently 2.7 percent, and our full-year target is 3 percent," Jiang said, referring to China's CPI. "So I don't think an adjustment to fuel prices will come soon."
The company said it would strive to achieve faster growth in its overseas oil and gas businesses, better allowing it to control costs by having its own production resources.
To that end, PetroChina recently invested in Australia's burgeoning coal-seam gas industry by bidding for Arrow Energy together with Shell.
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