OREANDA-NEWS. March 24, 2014. PetroChina Company Limited ("PetroChina" or “the Company", HKSE: 0857; NYSE: PTR; SSE: 601857) announced that the Company achieved steady growth in its production and operations, recording a double-digit net profit increase.

The Company achieved this in the face of the complicated domestic and international economic environment by implementing its guidelines of quality, profitability and sustainable development, making an overall plan for both the domestic and the overseas resources and markets, focusing on developing its principal business of oil and gas operations, and making great efforts to strengthen safety and environmental protection.

For the year ended 31 December, 2013, the Company recorded turnover of RMB2,258,124 million under the International Financial Reporting Standards (“IFRS”), representing an increase of 2.9% over the previous year. Net profit attributable to owners of the Company in 2013 was RMB129,599 million, representing an increase of 12.4% over the previous year, and basic earnings per share was RMB0.71, representing an increase of RMB0.08 over the previous year.

The Company carried out strict investment management polices emphasizing returns on investment, continued to optimize the investment structure, and maintained a reasonable pace of construction progress of a number of projects. As a result, the total investment amount was controlled effectively, and capital expenditures fell 9.6% to RMB318,696 million from the previous year.
 
Exploration and Production
In 2013, the Company continued to implement its “Peak Growth in Oil and Gas Reserves” Program, putting emphasis on key basins and target zones. It strengthened pre-exploration and overall assessment and stepped up the exploration of non-conventional resources. The Company made a number of important achievements in Sichuan Basin, Erdos Basin and Tarim Basin, and made important discoveries during the course of oil and gas exploration in Junggar Basin, Qaidam Basin and Bohai Bay Basin, reflecting the strong potential of the exploration business. In particular, the exploration of natural gas in Sichuan Basin achieved a major breakthrough, with newly-added proven gas reserve in the Longwangmiao gas reservoir of Anyue gas field standing at 187.5 billion cubic meters according to SEC rules for estimation of economically recoverable oil and gas reserves (or newly-added proven geological reserve for natural gas stood at 440.385 billion cubic meters according to the recognition standards of the Ministry of Land and Resources of the People’s Republic of China). This is the largest monomer marine non-compartmentalized carbonate gas reservoir discovered in China to date.

The Company endeavored to tap potential crude oil production capacities, accelerated the commencement of newly-constructed production capacities, carried out special arrangements in relation to water injection, and actively promoted redevelopment and major development experiments. As a result, the domestic crude oil output hit a new high again. With regard to the natural gas business, the Company put emphasis on key gas areas and key sectors. The Company organized its production and operation in a scientific manner and maintained a high growth rate in natural gas output. The crude oil output in Daqing Oilfield remained stable at more than 40 million tons, while oil and gas production in Changqing Oilfield reached 51.95 million tons, marking the establishment of the “Western Daqing” with high quality and standards. The construction of “Xinjiang Daqing” and the Sichuan-Chongqing Gas Area proceeded as scheduled.

In 2013, the Exploration and Production segment actively responded to oil price changes. With the state’s implementation of a new natural gas pricing mechanism, the Company tried to increase the production and benefits and maintained strong profitability. However, due to the falling price of crude oil, rising costs, tightened policies of certain overseas resource countries in relation to the oil and gas cooperation along with other factors, realized profit from operations of the Exploration and Production segment was RMB189,698 million, representing a decrease of 11.7% over 2012. However, the Exploration and Production segment remained the Company’s most important profit contributing segment.

Refining and Chemicals
In 2013, the Company adhered to the principles of market orientation and profitability, made overall arrangements for the allocation of resources and the processing plans, and optimized processing resource allocation and product structure in accordance with the market trends. It increased the production of high-grade gasoline, aviation kerosene, aromatic hydrocarbons and other high-efficiency products. In 2013, the Company processed 992.3 million barrels of crude oil and produced 90.3 million tons of refined products, with several technical and economic indicators reaching record high levels. The Company made steady progress in its key refining and chemicals projects. The gasoline quality upgrading projects were all completed and all automobile gasoline reached the China IV standard.

In 2013, the PRC further improved the pricing mechanism for refined oil products. Seizing this favorable opportunity while adhering to the principles of market orientation and profitability, and striving to optimize resource allocation and product structure, the Company successfully reduced the loss of the Refining and Chemicals segment to RMB24,392 million, narrowing the loss by RMB19,119 million over the previous year. In particular, the refining operations recorded operating losses of RMB4,708 million, narrowing the loss by RMB28,964 million over the previous year. The chemicals operations recorded an operating loss of RMB19,684 million, widening the loss by RMB9,845 million over the previous year due to the impact of the weak market for chemicals and the provision for impairment of assets.
 
Marketing
In 2013, the Company responded actively to market changes such as the slowing growth in demand, including making scientific allocation of its self-produced and externally sourced resources, emphasizing its retail business, reinforcing terminals, developing direct sales, optimizing its marketing structure and inventory control, and promoting the transformation and contracted operation of low-profitability service stations, all with the goal of expanding sales and enhancing profitability. The Company strengthened the development of its marketing network with 360 service stations increased. The total number of service stations operated by the Company stood at 20,272. The domestic sales of refined products reached 117 million tons, representing an increase of 1.7% over the previous year, further reinforcing the Company’s market share.

In 2013, due to the faltering world economy, slowing domestic economy and the weak demand for refined oil products, the Marketing segment recorded an operational profit of RMB7,562 million, representing a decrease of 53.9% over the previous year.

Natural Gas and Pipeline
In 2013, the Company coordinated various resources including domestically produced gas, imported gas and coal gas in the sales of natural gas, fully utilized the shaving capacity of Liquefied Natural Gas (“LNG”) terminals, gas storage and pipeline storage, optimized the distribution of market resources, focused on key regions and high-profitability markets, strengthened the management of the demand side and improved the quality and profitability of sales on a continuous basis. The construction of key oil and gas pipelines progressed in a steady manner. The west section of the Third West-East Gas Pipeline, the Zhongwei-Guiyang Connection Line, Tangshan LNG and Lanzhou-Chengdu Crude Oil Pipeline and the section to the south of the Yangtze River of the Lanzhou-Zhengzhou-Changsha Refined Oil Pipeline were completed and put into operation. The construction of the East section of the Third West-East Gas Pipeline and the Jinzhou-Zhengzhou Refined Oil Pipeline proceeded as scheduled. Meanwhile, the Company launched an innovative pipeline joint venture model. It contributed certain pipeline assets and operations to a joint ventures and business cooperation and introduced capital such as insurance and industrial funds, which greatly helped the Company to achieve light-asset growth and further development of its oil and gas business.

As at the end of 2013, the Company had a total of 71,020 km of domestic oil and gas pipelines, consisting of 43,872 km of natural gas pipelines, 17,614 km of crude oil pipelines and 9,534 km of refined product pipelines.

By effectively balancing various resources, strengthening external cooperation, controlling the pipeline transmission costs in a scientific manner and making efforts to promote increases in price and sales volume, the Natural Gas and Pipeline segment recorded operating profit of RMB28,888 million in 2013, representing an increase of RMB30,998 million over 2012. The Company sold 27.862 billion cubic meters of imported natural gas and 7.335 billion cubic meters of imported LNG, incurring a total loss of RMB41,872 million in the sales of imported natural gas and LNG. Through considerable efforts, the Company kept this loss flat over the previous year, with a higher volume of imported gas in 2013.

Overseas Oil and Gas(Note)
In 2013, the Company made major breakthroughs in the development of new overseas projects. It successfully acquired from ConocoPhillips Company certain interests in its off-shore natural gas and on-shore Canning Basin shale gas projects in the Western Australia, all the interest held by BHP Billiton in the Browse LNG Project of Western Australia and a part of ExxonMobil’s investments in its West Qurna-1 technical service contract. The Company also entered into an agreement with a wholly-owned subsidiary of Petrobras to acquire the entire shares of Petrobras Energia Peru S.A.. In its overseas oil and gas exploration, the Company adhered to the principles of overall research and organization and made further achievements in key exploration areas. The Company fully implemented the three major projects, namely, water injection, horizontal well and enhancement of recovery rate, raised the output of the Rumaila Project in Iraq, and accelerated the construction of the Halfaya Project in Iraq and the Aktobe Project in Kazakhstan. In 2013, the oil and gas equivalent output reached 136.5 million barrels, representing 9.8% of the total oil and natural gas equivalent of the Company.

In 2013, the Company’s international trading operations continued to develop rapidly, further expanding its crude oil trade scale. The Company continued to improve its ability to obtain its natural gas resources. The construction of the three oil and gas operating hubs proceeded steadily.

In 2013, the Company’s overseas operations recorded a turnover of RMB754,227 million, representing 33.4% of the Company’s total turnover. Profit before income tax expense of overseas operations reached RMB20,520 million, representing 11.5% of the Company’s profit before income tax expense.

Outlook for 2014
In 2014, the world economy is expected to continue to recover, albeit at a slow pace. External demand is expected to maintain stable. As China’s economy is entering into a new phase of development, the inelastic demand for oil and gas in China is expected to maintain rapid growth. The Company will continue to reinforce the implementation of the three strategies, namely, resources, market and internationalization, stick to the guidelines of quality, profitability and sustainable development, emphasize the development of its principal business of oil and gas, and strengthen the momentum of its innovation effort to maintain  steady growth of its production,  operation and business performance.

Note: The four operating segments of the Company are Exploration and Production, Refining and Chemicals, Marketing as well as Natural Gas and Pipeline. Overseas operations do not constitute a separate operating segment of the Company. The financial data of overseas operations are included in the financial data of the respective operating segments mentioned above.