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Beijing: Petro-China, the world's second-biggest company by market value, said first-half profit fell 35 per cent as refining losses and taxes eroded gains from record crude oil prices.
Net income dropped to 53.6 billion yuan ($7.8 billion), or 0.29 yuan a share, from 81.83 billion yuan, or 0.46 yuan a share a year earlier, the company said in a statement. That is in line with the median estimate of 54 billion yuan in a Bloomberg News survey of seven analysts.
PetroChina, overtaken by ExxonMobil as the world's most valuable company in the first half, was hurt by government fuel-price caps that undermined the company's ability to profit from a 46 per cent jump in oil prices. Cnooc, a Chinese oil producer that does not run refineries, said profit surged 89 per cent after it increased crude reserves and production.
"The first half should be the most difficult for Petro-China," Wang Aochao, a Shanghai-based analyst with UOB-Kay Hian, said before yesterday's report. "We expect the earnings to improve for the rest of this year as we assume crude prices to drop, while refining margins will rise after the government increased fuel prices in June."
PetroChina had a market value of $337 billion at today's close. The stock advanced 3.4 per cent to close at HK$10.3, before the earnings announcement.
Sales rise
Sales rose 40 per cent to 549.5 billion yuan in the first six months. PetroChina, 88 per cent owned by the Chinese government through China National Petroleum Corp, will pay a first-half dividend of 0.131827 yuan a share.
The government paid PetroChina and China Petroleum and Chemical Corp, the nation's largest refiners, rebates of 75 per cent on the 17 per cent value-added tax levied on crude imports in the second quarter.
The two companies will get about 40 per cent rebate on the tax for crude imported between July and September, the South China Morning Post said on Tuesday, citing people it did not identify.
Benchmark New York oil prices have gained 63 per cent in the past year, reaching a record $147.27 a barrel on July 11, boosting investments in new fields. PetroChina aims to spend 132.3 billion yuan on exploration and production, its 2007 annual report shows.
The oil producer will maintain spending on oil exploration to gain from rising demand and high crude prices, President Zhou Jiping said July 31. PetroChina plans to boost its annual refining capacity by 14 per cent to more than 160 million metric tons by 2010, Vice President Shen Diancheng said in May.
Spending plans
Capital expenditure will increase 15 per cent to 207.9 billion yuan this year, PetroChina said in March. Spending plans will include the acquisition of foreign assets from its parent, Chairman Jiang Jiemin said then.
The company has agreed to buy parent China National Petroleum's 50 per cent stake in CNPC Exploration & Development Co, the Wall Street Journal reported Tuesday, citing a person familiar with the matter. PetroChina's board of directors is yet to make a final decision on the potential acquisition, Spokesman Mao Zefeng said.
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