LNG

PetroChina posted a wider first-half overall net losses and falling revenues, including on imports of LNG and pipeline gas, but said it was optimistic for rest of 2020 on Chinese domestic demand.

The state-controlled Chinese major said in a Web-based earnings presentation that first-half net losses came to 29.98 billion Chinese yuan ($4.39Bln), of which the loss in the second quarter narrowed compared with the first quarter, “indicating a steady improvement in business” trends.

PetroChina is the Hong Kong-listed affiliate of China National Petroleum Corp. (CNPC) and has LNG project stakes in Mozambique and Canada.

The company said first-half revenues dropped to 929.04Bln yuan ($136.06Bln), representing a year-on-year decrease of 22.3 percent.

However, the Exploration and Production segment, one of the company’s four divisions, achieved an operating profit of 10.35Bln yuan ($1.51Bln).

The three other operating segments of the Group consist of Refining and Chemicals, Marketing and Natural Gas and Pipeline.

International operations do not constitute a separate operating segment of the Group.

The Marketing division recorded an operating loss of 12.89Bln yuan ($1.88Bln), while the Natural Gas and Pipeline segment achieved an operating profit of 14.37Bln yuan ($2.10Bln).

This was 21.5 percent lower that the 18.30Bln yuan ($2.68Bln) operating posted in the first six months of 2019.

PetroChina said sales volumes of imported natural gas and LNG recorded a net loss of 11.83Bln yuan ($1.73Bln), representing an increase in losses from last year of RMB631M yuan ($92.4M) in the six months..

“Under the influence of Covid-19 and the macroeconomic downturn, global natural gas market demand declined, while the international natural gas prices dropped across the world and LNG spot prices in Europe, America and Northeast Asia hit record lows,” said PetroChina.

PetroChina operates three important Chinese LNG import terminals at Dalian and Tangshan in the northeast of the country and at Rudong in the central Jiangsu province in the coastal area near Shanghai.

PetroChina additionally receives natural gas pipeline supplies from the Central Asian states of Turkmenistan, Kazakhstan, Uzbekistan as well Russia through CNPC.

“The growth of demand for domestic natural gas slowed down and output of natural gas continued to increase relatively rapidly, while the growth of imports of natural gas declined substantially,” it added.

PetroChina said that in the first half, the overall domestic consumption of natural gas amounted to 155.6 billion cubic metres, representing an increase of 4.2 percent compared with the same period of last year.

Domestic natural gas output amounted to 95.0 Bcm, an increase of 9.9 percent versus the same period last year.

It noted that first-half Chinese imports of natural gas, both pipeline and LNG, amounted to 66.7 Bcm, representing a rise of 3.3 percent compared with the first half of 2019.

PetroChina’s managing company CNPC now imports pipeline natural gas from Gazprom Power of Siberia project as well as LNG from projects such as the Yamal plant in Arctic Russia and from PetroChina LNG agreements.

The Chinese major is part of Royal Dutch Shell’s LNG Canada project under its own name PetroChina and has a stake in the Area 4 reserves in the Rovuma Basin offshore Mozambique with Italian company Eni and ExxonMobil.

A US report said natural gas demand in China has continued to rise even as pipeline gas and LNG imports have increased and as the government attempts to boost domestic output from shale gas projects run by two Chinese majors.

PetroChina reported a slight rise in first-quarter 2019 net profits as oil and gas revenues increased and losses were narrowed from imported LNG and pipeline natural gas because domestic gas prices were higher than last year.

Novatek, the Russian operator of the Yamal LNG plant in Siberia, said a subsidiary of the Yamal LNG stakeholder, China National Petroleum Corp., has decided to become a shareholder in Novatek’s second liquefaction joint venture, Arctic LNG II.

PetroChina, the Hong Kong-listed unit of China National Petroleum Corp. with widespread domestic assets and overseas stakes in oil and gas fields as well as Yamal LNG and an onshore liquefaction project in Mozambique, posted a jump in profits because of higher energy prices and soaring demand for natural gas.

Annual net profits at PetroChina amounted to RMB52.6 billion yuan ($7.86Bln) compared with 22.79 billion yuan ($3.39Bln) in 2017, a rise of 130.7 percent.

PetroChina posted a 16.8 percent rise in group revenues to 2.35 trillion Chinese yuan ($350.44 billion) in 2018 compared with 2.01 trillion yuan ($300.3Bln) in 2017.

In addition to holding its share in the Yamal joint Venture in Arctic Russia, PetroChina has a stake in the Area 4 reserves in the Rovuma Basin offshore Mozambique with Italian company Eni and ExxonMobil of the US that will underpin their Rovuma LNG project.

The plan submitted to the Mozambican government in Maputo gives details of the proposed design and construction of two processing Trains which will each produce 7.6 million tonnes per annum of LNG from the Mamba gas field.

“The Group seized the opportunity arising from the increase of international oil price in the first three quarters and the strong demand for natural gas,” stated PetroChina in its earnings statement.

PetroChina explained that the domestic output of natural gas steadily increased and imports of natural gas increased significantly, resulting in China surpassing Japan and becoming the largest importer of natural gas in the world for the first time.

“The overall supply and demand in the market was a bit tight. The country sped up the marketization of the natural gas prices, merged the city-gate prices of natural gas for residential and non-residential stations and further strengthened the regulation on pipeline transportation prices,” said PetroChina.

“The Shanghai Oil and Gas Exchange launched LNG terminal open-access transactions and the Chongqing Oil and Gas Exchange started international LNG transactions,” noted PetroChina.

China’s overall domestic output of natural gas amounted to 159.4 billion cubic metres in 2018, representing an increase of 7.2 percent compared with 2017.

PetroChina said natural gas imports were 124.2 billion cubic metres, representing an increase of 35 percent compared with 2017, while consumption of natural gas amounted to 280.3 Bcm, a rise of 18.1 percent versus 2017.

“The global economy recovered moderately, though various economies proved uneven in their respective development, resulting in increasing unstable and uncertain factors in international politics and economy,” added PetroChina.

“The economy of China remained generally stable with good momentum for growth,” it said.

China is also reliant on oil imports as its domestic output of crude oil in 2018 was just 189.28 million tons, representing a decrease of 1.1 percent compared with 2017.

“The group tried to improve the efficiency and profitability of its exploration activities and tried to reinforce the base of resources for keeping oil production stable and increasing gas output,” said PetroChina.

“In the Junggar Basin of Xinjiang, another significant discovery of exploration was made after that of the Ma Lake area,” it added.

“The oil and natural gas exploration in the Tarim Basin and Sichuan Basin successively made a new breakthrough. A group of reserves were also discovered and confirmed in the Erdos, Qaidam, Bohai Bay and Songliao Basins,” stated PetroChina.

“We pushed forward the development of unconventional oil and gas with steady steps and maintained momentum in growth of output of shale gas and coalbed methane,” explained PetroChina.

“In 2018, the domestic business achieved crude oil output of 733.7 million barrels, representing a decrease of 1.3 percent compared with 2017, and a marketable natural gas output of 3,324.7 billion cubic feet, representing an increase of 5.4 percent year-on-year,” it said.

In its overseas operations, PetroChina said total crude oil output amounted to 890.3 million barrels, representing an increase of 0.4 percent compared 2017.

“Overseas marketable natural gas output reached 3,607.6 billion cubic feet, representing an increase of 5.4 percent,” it added.

PetroChina said that at the end of 2018 it had global exploration rights for oil and natural gas amounting to 295.5 million acres.

“The number of net wells in the process of being drilled was 499 and the number of wells with multiple completions during the current reporting period was 9,792,” said PetroChina.