Friday, March 29, 2024
 
Columnist
Martin Hennecke
 
PETROCHINA
HKEx Stock Code : 00857 
 
Corporate Profile
principally engaged in (i) the exploration, development and production and marketing of crude oil and natural gas; (ii) the refining of crude oil and petroleum products, production and marketing of primary petrochemical products, derivative petrochemical products and other chemical products; (iii) the marketing of refined products and trading business; and (iv) the transmission of natural gas, crude oil and refined products and the sale of natural gas.

Business Review - For the year ended December 31, 2012

(1) Exploration and Production

Exploration

In 2012, the Group achieved notable results in its ¡§Peak Growth in Oil and Gas Reserves¡¨ Program. It strengthened pre-exploration and venture exploration of oil and focused on the exploration of natural gas. Active work was started in the exploration of non-conventional resources such as tight oil. The Group made a number of important discoveries and breakthroughs in Kuche and Tadong in Tarim Basin, the Cambrian zone of Moxi-Gaoshiti in Sichuan and Jimusaer in Junggar Basin for tight oil as well as in Dongping, Qaidam Basin for natural gas. In addition, significant progress was made in Jiyuan and Huaqing in Erdos Basin, Keshen and Tabei in Tarim Basin, Lukeqin in Tuha Basin and Mabei Slope in Junggar Basin. The reserve replacement ratio was 1.04 for the year and the basis of the Group's resources was further strengthened.

Production and Development

In 2012, the Group continued to carry out the ¡§foundation year¡¨ activities in the development of oilfields and achieved notable results in special control projects. Major development indicators of the existing oilfields continued to improve. Meanwhile, the build-up of production capacity in new oilfields proceeded smoothly. As a result of scientific organisation of production operations, oil and natural gas equivalent output in Daqing Oilfield remained stable at more than 40 million tons and that in Changqing Oilfield has topped 42 million tons. Development of the ¡§Xinjiang Daqing¡¨ Project proceeded in an orderly manner. Crude oil output remained stable and natural gas operations developed rapidly. The Group made active progress in its cooperation efforts with international companies in the area of non-conventional oil and natural gas and achieved new breakthroughs in technological research and development of non-conventional energy resources.

Overseas Oil and Gas

In 2012, the Group actively responded to the turbulent geopolitical environment and effectively averted operational risks. The non-conventional natural gas projects with Shell and Encana Corporation were successfully completed. Breakthroughs were made in the development of new projects. The Group accelerated its pace of increasing the output of key projects in the Middle East, Central Asia and South America, with the Rumaila Project in Iraq achieving an average daily output of 1.35 million barrels for the year and the Halfaya Project in Iraq successfully meeting the initial commercial output target earlier than scheduled. In 2012, the Group's overseas oil and natural gas production remained stable, with the oil and natural gas equivalent output reaching 136.9 million barrels, representing an increase of 13.3% as compared with last year.

In 2012, the Group's total crude oil output reached 916.5 million barrels, representing an increase of 3.4% as compared with last year and was the highest growth achieved in recent years. The marketable natural gas output reached 2,558.8 billion cubic feet, representing an increase of 6.8% as compared with last year. The oil and natural gas equivalent output amounted to 1,343.1 million barrels, representing an increase of 4.5% as compared with last year.

(2) Refining and Chemicals

In 2012, the Group's refining and chemicals businesses firmly followed market direction and strived for high profitability. It further optimised the allocation of resources, the processing load, products structure, equipment maintenance and sales of chemical products. In 2012, the Group's refineries processed 1,012.5 million barrels of crude oil, representing an increase of 2.8% as compared with last year, and produced 91.016 million tons of gasoline, diesel and kerosene, representing an increase of 4.4% as compared with last year. All of the automobile gasoline and diesel produced by the Group reached the national grade III emission standard on schedule. The percentage of high-grade gasoline produced by the Group reached 98.4%, representing a 1.7 percentage points increase over the same period of last year.

In 2012, the Group pushed forward its key refining and chemicals projects in an orderly manner. Construction at the Sichuan Petrochemical was completed. Construction has commenced at the Guangdong Petrochemical project, and approval was received from the State for the Yunnan Petrochemical project. The oil refining and ethylene project at Fushun Petrochemical and the rebuilding and expansion of the ethylene project at Daqing Petrochemical as well as capacity expansion of the oil refining project at Hohhot Petrochemical were completed and production commenced on schedule. Therefore, the adjustment to the strategic layout of the refining and chemicals business achieved new breakthroughs.

(3) Marketing

Domestic Operations

In 2012, the marketing operations of the Group were faced with a slowdown in the growth rate in demand, frequent fluctuations in oil prices and fierce competition in the domestic refined products market. In view of these, the Group made accurate assessment of market trends which was complemented by a scientifically devised marketing strategy and the efficient allocation and deployment of resources. Under such complex market conditions, the Group achieved a sales volume of 115 million tons for refined products, which was slightly higher than that for last year. With continuing emphasis on optimising the marketing network, the Group steadily pushed forward the development of high-margin and strategic markets. As a result, 748 service stations and 13 oil depots were developed in the year and the Group''s share of the retail market reached 39.3%.

International Trading Operations

In 2012, the Group strengthened the bringing in of resources and kept on expanding trading volumes by making full use of a number of effective measures. The construction of the three oil and gas operating hubs in Asia, Europe and the Americas proceeded steadily. The Group achieved continuous rapid development of its international trading operations.

(4) Natural Gas and Pipeline

In 2012, the Group coordinated and balanced the utilisation of domestic and overseas resources. The Group also tapped into the market potentials in the Bohai Rim, Yangtze Delta and Sichuan-Chongqing markets, strengthened marketing efforts in key areas and high-margin markets and pushed forward the simultaneous commencement of production for new users of the Second West-East Gas Pipeline (East Section) and the Shandong Pipeline Network. As a result of all of these measures, natural gas sales volume continued to maintain a double-digit growth rate.

The construction of strategic oil and gas pipelines as well as domestic trunk pipeline networks proceeded smoothly during the year. The Second West-East Gas Pipeline became fully operational and was ready to supply gas to Hong Kong. Completion and commencement of production of the North Section of Zhongwei-Guiyang Gas Pipeline effectively raised the Group''s capability to supply gas to the Sichuan-Chongqing Area. Construction work for the Third West-East Gas Pipeline, which will become another trunk line for transporting energy resources on land, has formally begun. The Third West-East Gas Pipeline is the first project where both public and private sector funds are used for its construction and operation and has set a new model for the Company to operate major projects. It also has major significance in China''s economic development and optimization of the energy resource structure.

As at the end of 2012, the Group's pipelines measured a total length of 66,776 km, consisting of 40,995 km of natural gas pipelines, 16,344 km of crude oil pipelines and 9,437 km of refined product pipelines.

Business Outlook - For the year ended December 31, 2012

In 2013, the world economy is expected to recover, albeit at a moderate rate. Demand for energy will continue to grow. The Chinese government will continue to strengthen macro economic control and to implement active fiscal policies and prudent currency policies in order to maintain healthy economic growth and development. The Group will, through raising development quality and focusing on efficiency, continue to pursue the multi-pronged strategy on resources, market and internationalisation. The Group will place emphasis on the development of oil and gas as the principal activities, strategic development and core competence in a bid to maintain a steady and rapid growth of the its production and operation.

In respect of exploration and production, the Group will continue with its intensive efforts in the ¡§Peak Growth in Oil and Gas Reserves¡¨ Program. In doing so, the Group will mainly focus on the seven major basins, conventional oil and gas, as well as independent prospecting. Venture exploration in new oilfields will be strengthened and exploration for tight oil and gas will be actively pursued. The aim is to strengthen the reserve base for sustainable development. In addition, with increasing the reserve utilisation rate, the ultimate recovery rate and the daily production of individual wells in mind, the Group will continue to transform its approach to development and to enhance its technology and standard of development. The Group will remain focused on natural gas as its strategic growth project by stepping up the development of key gas fields whilst steadily pursuing the development of non-conventional natural gas such as tight gas, coal seam gas and shale gas. The Group will seek to achieve an oil and natural gas equivalent output target of 1,387.8 million barrels for 2013

In respect of refining and chemicals, the Group will single out market orientation and efficiency as guiding principles. On the one hand, the Group will maintain safe and stable operation of refining production, optimise regional resources allocation and processing loads and carry on the efforts in structural adjustment of installations and product quality upgrade. On the other hand, the Group will vigorously develop new products, increase the production of high-quality and value-added products, as well as enhance profitability and market competitiveness

In respect of marketing, the Group will take full advantage of the benefits of market synergies by innovating and enhancing its approach to marketing. The Group will place emphasis on the development of high-margin markets and sales to end users, as well as continuous enhancement in the quality and efficiency of marketing. The Group will optimise its distribution networks and strengthen the construction of service stations and key storage facilities as part of its ongoing efforts to raise its preparedness for the dynamic market. The Group will continue with its orderly and effective development of fuel oil, lubricants and service station convenient store business to constantly broaden its operations and to increase profitability.

In respect of natural gas and pipeline, the Group will attach great importance to the overall balance and optimal allocation of natural gas resources and development of central and high-margin markets. The Group will strengthen the development of storage and transportation facilities to maximise its overall advantage and to increase the profitability of natural gas sales. The Group will accelerate the construction of key oil and gas pipelines projects with strategic importance, and will strive to complete both the west section of the Third West-East Gas Pipeline and the south section of the Zhongwei-Guiyang Gas Pipeline as a basis for development of natural gas markets.

In respect of international operations, the Group will speed up the development of the five overseas oil and gas cooperation zones whilst continuing to pursue the integration of exploration and development, which will enable the Group to tap the exploration potential of existing projects and to expand its development of large-scale projects in key regions. By doing so, the Group will actively develop natural gas, non-conventional and deep-sea exploration and development so as to ensure a rapid increase in oil and gas production. The Group will accelerate the construction of pipelines with strategic importance and international oil and gas operating hubs and will improve its trade system and diversify its trade approaches in a sustained effort to increase its say and influence on the international market. At the same time, the Group will speed up internationalisation of its operations through more intensive strategic cooperation with host countries of resources and cooperation partners. By constant optimisation of its overseas projects portfolio and business structure, the Group aims to enhance its capability of optimising world-wide resources allocation.

Source: PetroChina (00857) Annual Results Announcement
Chairman Zhou Jiping Issued Capital (shares) 21,099M
Par Value RMB 1 Market Capitalisation (HKD) 187,147M
 
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