A laborer repairs an oilpumping unit Guang Niu, Getty Images

Chinese Energy Giants Profits Fall on Low Oil Prices

PetroChina, Sinopec, CNOOC all plummet during the first half, with 'downward pressure on the economy' still in play for China the rest of the year.

SHANGHAI — China’s three biggest energy firms saw their first-half net profits slump as low international oil prices and a weak global economy hit the bottom line, they said.

PetroChina, the listed arm of China’s biggest oil producer China National Petroleum Corp. (CNPC), said its net profit for the first half tumbled 62.7% year-on-year to 25.40 billion yuan ($3.96 billion), according to a statement to the Hong Kong stock exchange on Thursday.

The energy giant described the market environment as challenging due to the “weak recovery of the international economy, the intensified downward pressure on the domestic economy.”

China’s economy grew 7.0% in each of the first two quarters, slowing from a 7.4% expansion last year, which was its weakest since 1990.

PetroChina said international oil prices fluctuated at low levels during the period and market demand for oil and gas was weak.

Oil prices hit their lowest levels since early 2009 this week over concerns China’s slowing economy will curb demand for the commodities that have helped drive its growth over the past three decades.

PetroChina’s turnover in the January-June period also dropped, falling 23.9% on the year to 877.62 billion yuan ($136.93 billion), it said. The company warned that the market situation may remain weak in the second half.

“The mild recovery of the global economy will remain highly uncertain in the second half of 2015 ... (as) the global oil price is likely to keep fluctuating at a low level,” the company said. It added “downward pressure on the economy still exists” for China in the second half.

‘Little optimism’

Another refining giant, Sinopec, reported that net profit for the first six months slumped 22.3% to 24.43 billion yuan ($3.81 billion), it said late Wednesday in a statement to the Hong Kong stock exchange, where it is listed. It also blamed slow economy recovery and low oil prices for the drop.

“In the first half of 2015, the global economic recovery remained slow,” Sinopec chairman Wang Yupu said in the statement. “International crude oil prices plunged in the second half of last year and fluctuated at low level in the first half.”

Sinopec’s revenue dropped 23.3% year-on-year to 1.04 trillion yuan ($162.26 billion) in the January-June period.

Separately, China’s main offshore oil and gas producer, CNOOC, reported a 56.1% year-on-year plunge in net profit to 14.73 billion yuan ($2.30 billion) in the first half, the company said in a statement to the Hong Kong stock exchange late Wednesday.

“Economic growth in China stabilized from slowing down and saw signs of bottoming out, while international oil prices continued to hover at low levels,” CNOOC chairman Yang Hua said in the statement.

Its revenue also fell sharply by 35.5% year-on-year to 89.59 billion yuan ($13.98 billion) in the first half, according to the statement. CNOOC warned there was little to hope for in the second half.

“There is little optimism in the world’s macro-economic environment,” Yang said. “International oil prices are expected to remain at a low level.”

Despite the results, PetroChina gained 4.13% in Hong Kong trading and rose 2.33% in Shanghai. Sinopec jumped 3.94% in Shanghai and added 1.82% in Hong Kong, while CNOOC surged 14.39% in Hong Kong.

Copyright Agence France-Presse, 2015

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