Kevin Foster of global energy and commodity price reporting agency Argus Media on Wednesday (29 April) published an assessment of losses taken by Chinese oil majors PetroChina and Sinopec and their strategies to weather through the current oil market crash:
China’s two largest oil companies state-controlled PetroChina and Sinopec slumped to big losses in the first quarter as the impact of the Covid-19 outbreak hit their domestic refining operations.
PetroChina reported a loss of 16.23bn yuan (USD 2.3bn) in the period from a profit of Yn10.25 bn (USD 1.45 bn) a year earlier, blaming the coronavirus and a “significant increase in instability and uncertainty”.
Global oil and refined product supplies exceeded demand in the period, PetroChina said. But the company nevertheless boosted its upstream output by 6.1% from a year earlier to 4.55mn b/d of oil equivalent (boe/d), in line with a rise in capital expenditure and new capacity. Crude output was up by 4.2% to 2.56mn b/d.
Chinese state-controlled producers are under political pressure to raise output to help ease the country’s reliance on imports. This helped drive a 6% increase in PetroChina’s domestic production to 3.93mn boe/d. But overseas output also rose, up by 7% to 619,000 boe/d.
PetroChina scaled back its refinery output amid widespread shutdowns of the Chinese economy in the quarter because of the coronavirus outbreak. Its crude throughputs fell by 9.6% to 3.04mn b/d, while output of gasoline, diesel and kerosine was down by 13.8% to 25.2mn t. The company’s refining and chemicals segment fell to a loss of Yn8.7bn from a profit of Yn3.1bn a year earlier.
PetroChina expects the global oil market to remain oversupplied and prices to stay low this year. It is taking “active measures” to deal with the risk of crude price fluctuations, it said, without giving details.
Refining-focused Sinopec made a loss of Yn19.78bn (USD 2.79 bn) in the quarter after a profit of Yn14.76bn (USD 2.09 bn) a year earlier. Its refinery segment was hard hit, making an operating loss of Yn25.8bn (USD 3.65 bn).
Sinopec, China’s largest refiner by capacity, cut throughputs by 13% to around 4.3mn b/d in the quarter. Its fuel output — gasoline, diesel and kerosine — was down by 16.3% to 33mn t. Upstream production held steady, dropping by just 1% to 1.23mn boe/d.
Photo credit and source: Argus Media
Published: 30 April, 2020
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