PetroChina Third-Quarter Profit Rises 30% on Price

By Wang Ying

Oct. 29 (Bloomberg) -- PetroChina Co., Asia's biggest oil producer, said third-quarter profit rose 30 percent, beating analysts' estimates, after crude oil prices surged to a record and output climbed.

Net income climbed to 39.9 billion yuan ($5.8 billion), or 0.22 yuan a share, in the three months to Sept. 30, from 30.7 billion yuan, or 0.17 yuan, a year earlier, PetroChina said in a statement to the Shanghai stock exchange today. Third-quarter sales gained 48 percent to 304 billion yuan.

Benchmark oil prices in New York were 57 percent higher in the third quarter from a year earlier and touched a record $147.27 a barrel on July 11. The world's second-biggest oil company after Exxon Mobil Corp. plans to increase refining capacity by 52 percent by 2010 and replace crude oil reserves it depletes at a ratio exceeding 100 percent.

``Expanded production has benefited the company,'' Grace Liu, an oil analyst with Guotai Junan Securities Co., said by phone from the southern city of Shenzhen. ``Higher domestic prices have also helped improve refining margins.''

China, the world's second-biggest oil user, raised gasoline and diesel prices by at least 17 percent in June, enabling refiners to pass on some of the higher crude costs to consumers.

Profit Increase

The Beijing-based company's third quarter profit is higher than the median estimate of 30.2 billion yuan in a Bloomberg survey of three analysts.

PetroChina shares rose 5.8 percent to HK$4.92 in Hong Kong today, before the results announcement. The stock has slumped 65 percent this year, compared with a 54 percent drop in the benchmark Hang Seng Index.

The oil producer boosted crude production by 2.8 percent to 653 million barrels in the first nine months and its oil- processing volume by 5.1 percent to 643 million barrels for the period, the company said.

PetroChina produced 55.6 million tons of gasoline, diesel and kerosene in the first three quarters, a 4.6 percent increase from a year earlier, it said. Its natural gas production gained 16 percent to 1.4 trillion cubic feet.

The parent company China National Petroleum Corp. will continue to buy shares in PetroChina in the 12 months starting Sept. 22, the Hong Kong and Shanghai-listed oil company said. China National last month purchased 60 million of PetroChina's Shanghai-listed shares as the government encourages buybacks to boost the country's stock market.

$80 a barrel

Chairman Jiang Jiemin said last week he wants to see oil prices at about $80 a barrel. The refining unit will make a profit in November, he said then.

PetroChina is studying the possibility of acquiring financially stressed resources companies, Jiang said last week.

Oil companies in China have resumed their quest for global resources after a two-year hiatus as the worst financial crisis since the Great Depression and falling commodity prices prompt a sell-off in share markets, making companies cheaper to acquire.

The Chinese oil producer lost its mantle as the world's most valuable oil company in the first half to Exxon after government fuel-price caps undermined its ability to pass on rising raw material costs. China controls fuel prices to limit their impact on inflation in the world's fastest-growing major economy.

To contact the reporter on this story: Wang Ying in Beijing at wang30@bloomberg.net.