PetroChina Plans to Maintain Oil Exploration Spending

By Wang Ying

July 31 (Bloomberg) -- PetroChina Co., the world's second- biggest company by market value, will maintain spending on oil exploration to gain from rising demand and record crude prices.

``Next year's exploration budget will be similar to 2008's levels,'' President Zhou Jiping said in Beijing today after a meeting with shareholders to approve a bond sale of as much as 60 billion yuan ($8.8 billion).

Benchmark New York oil prices have gained 62 percent in the past year, reaching a record $147.27 a barrel on July 11, spurring investments in new fields. PetroChina plans to spend 132.3 billion yuan on exploration and production, its 2007 annual report shows. BP Plc said yesterday it plans capital spending of $22 billion this year, excluding acquisitions.

``Non-core'' business spending will be cut by 20.7 billion, Zhou said today, without elaborating. Parent China National Petroleum Corp. plans to cut 5 percent of its workforce over the next three year to cut costs, the National Business Daily newspaper said earlier this month, citing a company newsletter.

The domestic bonds approved today will have maturities of as long as 15 years and may be sold in stages, PetroChina said in June. The funds are for working capital and to improve its debt structure, company said.

PetroChina shares climbed 0.6 percent to HK$10.36 in Hong Kong trading at the market's midday break. The stock has fallen 11 percent in the last year, compared with a 1.7 percent decline in the benchmark Hang Seng Index.

Jidong Nanpu

PetroChina will spend 12.8 billion yuan to boost production capacity at its Changqing and Daqing fields, the company said in its Shanghai-listing prospectus last year.

The Beijing-based explorer and refiner will use 1.5 billion yuan to develop part of the Jidong Nanpu field, China's biggest oil discovery in almost 50 years, and 6 billion yuan to expand an ethylene plant at Daqing.

PetroChina's capital expenditure will increase 15 percent to 207.9 billion yuan this year, the company said in March. Spending plans will include the acquisition of foreign assets from its parent, Chairman Jiang Jiemin said then. The Hong Kong- listed company intends to buy China National Petroleum Corp.'s share of an overseas oil and gas exploration joint venture, CNPC Exploration & Development Co.

To contact the reporter on this story: Wang Ying in Beijing at ang30@bloomberg.net.