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October 29, 2009

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Home » Business » Energy

Refiner's net dips but outlook seen better

PETROCHINA Co yesterday said third-quarter earnings tumbled 23.5 percent on lower crude prices, but analysts expect a better outlook amid a steady rise in oil prices and stronger fuel demand.

Its net profit in the July-September period dropped to 30.85 billion yuan, or 0.17 yuan per share, based on international accounting standards, the oil major said.

That missed a consensus forecast of 34.1 billion yuan in a Reuters poll of seven analysts.

PetroChina and other oil giants have been hit by a steep drop in oil prices. Britain's BP Plc this week posted a 47-percent plunge in third-quarter earnings.

New York crude, which hit an all-time high in July last year, averaged 42 percent lower in the reporting period from a year earlier. But prices have since risen 78 percent this year.

Although PetroChina and domestic peer Sinopec Corp benefit from the government's new fuel pricing mechanism that helps them end years of heavy refining losses, the recent fuel price rises are not enough to match the rebound in crude rates.

"Though crude prices and a lag in fuel price hikes would affect the two oil groups' third-quarter profit, the fuel price adjustments have come in more timely than before," China Galaxy Securities analyst Li Guohong said. "Refining margins would remain relatively stable and the two groups' earnings will become better."

Separately, Zhang Jianhua, a Sinopec vice president, told reporters in Beijing yesterday the company made a loss in the refining sector this month because the increases in domestic fuel prices lagged the recent rally in crude prices.

His remarks came as the industry is anticipating another imminent government fuel price hike.

Sinopec, Asia's top refiner, is set to report its earnings today.


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