UPDATE 2-PetroChina Q2 net up on oil prices, misses f'cast

* Q2 net profit 32.8 bln yuan vs 34.1 bln consensus

* Sees higher earnings in H2

* Eyes relationships with Venezuela, Iraq, Khazakhstan

* Exploring agreements with BP, Conoco-Philips

* Shares end up 0.71 pct in Hong Kong before results

(Adds company and analyst quotes)

By Sui-Lee Wee

HONG KONG, Aug 26 (Reuters) - PetroChina Co Ltd (0857.HK), the world's second-most valuable oil and gas producer after Exxon Mobil Corp (XOM.N), sees high oil prices lifting profit in the second half after second-quarter figures missed forecasts.

The company expects higher earnings for the rest of the year and should hit its 2010 production targets, its president Zhou Jiping told reporters in Hong Kong. Separately, PetroChina will also ramp up its efforts to increase its overseas presence.

Analysts cautioned, however, that oil prices would probably continue to trade in the $70-80 a barrel range and that PetroChina's oil production could flatten out, both of which could hold down its second-half profit.

"I think we'll continue to see earnings growth in the second half of 2010, but it will be slower than the gains we saw in the first half," said Neil Beveridge, an analyst with Sanford Bernstein.

China's largest oil producer and peers such as CNOOC Ltd (0883.HK)(CEO.N) have benefited from a 30 percent increase in crude oil prices in the second quarter.

But they also face challenges, including weak refining margins kept down by strict state controls on what they can charge for refined products such as gasoline.

Analysts also said PetroChina (601857.SS)(PTR.N) might not be able to sustain strong profits in the second half if measures to cool the economy lead to a slowdown in fuel demand.

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China's fuel prices versus U.S. crude prices, click:

r.reuters.com/zuh37n

Table of China's gasoline and diesel prices since 2003:

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LOOKING OVERSEAS

PetroChina, which in recent years has aggressively pursued oil and gas assets overseas, will expand its search to Venezuela, Iraq and Khazakhstan, Zhou said.

"The international business will be the major driver for the company in the long run," he said.

The oil and gas company is also discussing possible cooperation agreements with BP (BP.L) in refining and another with Conoco Phillips (COP.N) on shale gas development in China's Sichuan province.

PetroChina has been involved in several transactions recently, including a joint purchase with Royal Dutch Shell (RDSa.L) to buy Australian coal-seam gas firm Arrow Energy Ltd AOE.AX and an acquisition of two oil sands properties from Athabasca Oil Sands Corp (ATH.TO) last year.

"PetroChina has significant cash reserves and it's clearly looking for acquisitions," said Beveridge. "I think you'll see them focus on Central Asia, Latin America and Canadian oil sands."

Led by Chairman Jiang Jiemin and valued at $266.6 billion, PetroChina is 86.3-percent-owned by China National Petroleum Corp, China's largest oil company.

The company earned 32.8 billion yuan ($4.82 billion) in the second quarter, up from 31.53 billion yuan a year earlier, according to a statement to the Hong Kong Stock Exchange.

That missed a 34.13 billion yuan average estimate in a Reuters poll of eight analysts.

PetroChina's first-half total crude oil output rose 1.7 percent on the year. The average realised crude price for the group in the first half was $72.42 a barrel, up 70.6 percent.

It processed 439.1 million barrels of crude oil in the first half, up 12.8 percent from a year ago.

PetroChina's Hong Kong shares have fallen about 9 percent this year, while Sinopec shares have lost about 12 percent. The benchmark Hang Seng Index .HSI is down about 6 percent. (Editing by Chris Lewis and Will Waterman) ($1=6.799 Yuan)