UPDATE 1-PetroChina foresees hefty gains from gas price hike
* Q2 net profit 29.5 bln yuan vs 25.4 bln yuan estimate
* H1 net profit 65.5 bln yuan vs 62 bln yuan year earlier
* H1 oil, gas output rises 4.4 pct on year
* PetroChina vows to accelerate natural gas development after price hike
HONG KONG, Aug 22 (Reuters) - PetroChina Co Ltd , which has bled billions of dollars from selling imported natural gas at deep discounts, is turning optimistic about its natural gas business after the government's first gas price hike in three years.
China's dominant energy producer expects the price hike in July to narrow its losses from selling imported gas and boost its profitability by 20 billion yuan ($3.27 billion) every year from 2014, President Wang Dongjin said on Thursday.
PetroChina recorded a loss of 42 billion yuan last year for selling imported gas at artificially low prices as mandated by the government to tame inflation. The price hike in July will boost PetroChina's overall profitability by 10 billion yuan this year, Wang told reporters after the company posted interim earnings that surpassed analyst estimates.
The price hike was a long-awaited move by the government to trim the losses of gas importers and ensure stable supply of the cleaner-burning fuel to the world's second-largest economy.
PetroChina will accelerate the development of its natural gas business, its recently appointed president said, adding that he expected the government's gas pricing regime would become increasingly market-oriented.
Gas imports are important to China because domestic production is not sufficient to meet growing demand. The imported gas is delivered via pipeline from Central Asia and by ship from countries like Australia, Indonesia and Qatar.
The world's biggest energy-consuming nation purchased 42.5 billion cubic metres (bcm) of gas from overseas last year. That was up more than 30 percent compared with 2011 and a nearly 10-fold increase from 2007.
PetroChina produced 1.332 trillion cubic feet (37.7 bcm) of natural gas in the first half of 2013, up 8.2 percent from a year earlier. That accounted for nearly 65 percent of China's overall domestic gas output during the period, according to Reuters calculations based on data from PetroChina.
The company expects its output of gas from shale to remain modest in the next few years. Shale gas production will hit 1.5 bcm by 2015, Wang said.
PetroChina's new confidence for its gas business is in line with the company's shift in focus to profitable projects from merely acquiring projects for the sake of expansion.
"PetroChina will shift its focus to the quality of growth and profitability rather than just scale expansion," said Wang, who was appointed as president in July.
Under its new strategy, PetroChina will also give priority to domestic exploration and production, he told reporters.
The strategy is in sync with the company's move away from downstream businesses that are less profitable. In June, PetroChina divested some of its natural gas pipeline assets to domestic firms.
As for its overseas business - which accounted for about 10 percent of overall oil and gas output and pre-tax profits in the first half - PetroChina will focus on large-scale and quality projects as it becomes a "world-class" global oil major by 2020, Wang said.
PetroChina posted a 29 percent rise in its second-quarter profit to 29.5 billion yuan, according to Reuters calculations based on PetroChina's first-half results released on Thursday. That exceeds an average forecast of 25.4 billion yuan by five analysts polled by Thomson Reuters.
Shares in PetroChina closed 1.05 percent higher in Hong Kong on Thursday at HK$8.70, ahead of the firm's earnings release. The benchmark Hang Seng Index rose 0.36 percent.
Net income grew 5.6 percent to 65.5 billion yuan in the first six months, said PetroChina, which also refines crude oil to produce fuels.
Profitability was helped by a loosening in China's fuel pricing controls, which have constrained refiners' earnings for years. In March, China implemented a more flexible fuel pricing mechanism, the first major revamp in four years, to help prevent fuel shortages and tame consumption.
Asia's largest refiner China Petroleum & Chemical Corp , known as Sinopec Corp, is expected to report a second-quarter net profit of 14.8 billion yuan later this week, up from 11.09 billion yuan a year earlier, according to four analysts polled by Thomson Reuters.
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