SINGAPORE(Reuters) - PetroChina Co, Asia’s largest oil and gas producer, reported a sharp fall in third-quarter profit on Wednesday, dragged down by weaker global energy prices and slowing growth in its domestic gas market.
Net profit for the July to September quarter was 8.83 billion yuan ($1.25 billion), down 58.4% compared with the same period a year ago and the weakest quarterly results this year, according to a company filing with Hong Kong stock exchange.
For the first nine months of 2019, net income fell 23.4% from a year earlier to 37.25 billion yuan, the state firm said.
“Amid an increasingly complex and rigid global economic and trade environment ... international oil prices have fallen over last year,” the company said.
“Domestically, China’s refined fuel supply capacity is in severe overcapacity...(and) growth in the natural gas market is slowing.”
Revenue for the quarter edged up 1.8% from a year ago to 618.14 billion yuan. For the first nine months, revenue rose 5.1% to 1.81 trillion yuan.
PetroChina also said its natural gas import business recorded a 21.76 billion yuan net loss during the January-September period, deepening from a 19.96 billion loss recorded for the same period in 2018 due to a weaker Chinese currency and higher import cost.
In a briefing to analysts earlier on Thursday, PetroChina officials said the gas losses mostly occurred in the third quarter, adding the firm will step up efforts to boost domestic production and further optimize its fourth quarter operations to serve demand which typically peaks during the winter heating season.
“We’ll raise the domestic gas sales prices (in the fourth quarter) to levels higher than a year earlier...(and) divert higher-cost long-term imported gas to regions with higher affordability,” Wang Kaisheng, a finance director of PetroChina told analysts.
The firm imported a total of 15.7 billion cubic meters of gas in the third quarter, flat from the previous quarter, Wang added.
The group’s crude oil output increased 2.9% during the first nine months versus a year earlier — a pace more than doubled the 1.2% national rate during the same period thanks to increased spending on drilling - to 682.7 million barrels.
Gas output rose 8.7% to 289.3 billion cubic feet (bcf).
The stronger growth in gas versus crude oil production follows an accelerated drilling programme in key basins such as Sichuan in the southwest, Ordos in the north and Tarim in the northwest.
This has also led to sizeable discoveries such as conventional gas deposits in the Bozi-9 well in the Tarim basin of Xinjiang region and shale gas in the Changqing-Weiyuan and Taiyang blocks in Sichuan.
The company’s Hongkong-listed shares have fallen by 18% so far this year, weighed by concerns that Beijing’s plan to set up a national oil and gas pipeline group will force it to cede control of its dominant pipeline assets, which have generated steady revenues.
PetroChina, which is also China’s second-largest oil refiner, processed 906 million barrels of crude in the first nine months of the year, up 4.3% from a year earlier.
Despite the growth in throughput, PetroChina’s operating profits at its refining department shrank nearly 90% during the period to 3.4 billion yuan as a domestic supply overhang squeezed margins, the firm said.
Company officials said on Thursday that the sluggish fuel demand growth could extend into the fourth quarter.
Reporting by Chen Aizhul; Editing by Kim Coghill, Emelia Sithole-Matarise & Shri Navaratnam