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PetroChina Q4 profit plunges 39% for sharp drop in oil price

THE sharp drop in crude prices caused PetroChina to post a 39-percent slump year on year in fourth-quarter earnings, missing analyst forecasts.

Net profit for the firm in the quarter fell to 20.9 billion yuan (US$3 billion), according to figures derived from its annual results released yesterday. This lagged a consensus forecast of 33.1 billion yuan by 20 analysts in a Thomson Reuters survey.

For the whole of 2008, net profit fell 22 percent to 114 billion yuan, or 0.63 yuan a share - its first drop in annual earnings since 2001. This fall was due largely to refining losses which widened fourfold to 83 billion yuan due to government price caps. Sales rose 28 percent to 1.1 trillion yuan.

PetroChina joins other global oil giants in reporting lower earnings as crude slumped 70 percent by the end of 2008 from a record of over US$147 a barrel in July. PetroChina would expedite overseas acquisitions given the lower crude rates, its President Zhou Jiping said yesterday, adding that it's looking to increase cooperation in projects in Russia, Venezuela, Iraq and Qatar.

"In 2009, impacted by the global financial crisis amid increasing uncertainties in the global economic environment, the growth of the Chinese economy has slowed, marked by shrinking domestic demand for petrochemical products," PetroChina said in a statement.

But PetroChina said it will continue to give top priority to resource exploration and push ahead key refining and petrochemical projects. It forecast capital expenditure of 233.1 billion yuan for 2009, marginally up on last year's.

Chinese oil refiners could now see relief in their refining business as a new pricing mechanism that took effect late last year will ensure "reasonable" profit margins.

"The 2008 drop was mainly due to the refining loss," said Greatwall Securities analyst Wang Gang. "But the new pricing system will help the sector to recover this year."

China has cut fuel prices twice in December and in mid-January under the new pricing system to reflect lower crude prices.

Yesterday, it raised fuel prices by up to 5 percent as crude prices gained.


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