petrochina

PetroChina Achieved Steady Development in 2015

by Proactively Adapting to the "New Normal" of China's Economic Development and Carrying Out Production and Operations
in an Orderly and Efficient Manner

2016-03-23   

23 March, 2016, Beijing - PetroChina Company Limited ("PetroChina" or "the Company", HKSE: 0857; NYSE: PTR; SSE: 601857) today announced that the Company achieved stable and controlled production and operations, and maintained a sound financial position with several key indicators outperforming some domestic and foreign peers. These took place amid a complex and severe domestic and international economic environment represented by the sluggish global economic recovery, continuously growing downward pressure on China's economy, the oversupply in the oil and gas market and a continuous and sharp plunge in international oil prices. The Company achieved this by making timely adjustments to its development philosophy, with a greater focus on quality and profitability. It also responded with great endeavor to pressure brought by low oil prices through implementing a series of reforms and innovative measures, such as broadening revenue sources, reducing costs and improving profitability.
As of 31 December, 2015, in accordance with IFRS, the Company recorded a turnover of RMB1,725,428 million, representing a decrease of 24.4% over the previous year. In spite of a nearly 50% drop in crude oil prices and continuous cuts in prices of domestic refined products and natural gas, the Company still achieved RMB35,517 million in net profit attributable to shareholders of the company, and basic earnings per share of RMB0.19.

Exploration and Production

In 2015, the Company emphasized quality and profitability in its oil and gas exploration and development business. Domestically, it continued to make headway with the "Peak Growth in Oil and Gas Reserves" Program and implemented fine exploration for favorable zones and strata series, with steady progress made in oil exploration. For the domestic development and production business, the Company continued to optimize its capacity deployment, set the scale and pace of development in a scientific manner, deepened the potential tapping in mature fields, and effectively controlled the natural decline of production to ensure the overall profitability of development. For the natural gas business, the Company emphasized key gas areas, and organized production and operation in a scientific manner to maintain growth in the output. Daqing Oilfield continued to maintain a steady oil and gas equivalent output of more than 40 million tons. Changqing oilfield kept a stable and effective production, with an oil and gas equivalent output of more than 50 million tons. The Moxi-Longwangmiao gas field project with a capacity of 11 billion cubic meters in the Sichuan-Chongqing gas area was completed with high quality and effectiveness, and put into full operation. The domestic exploration and production business achieved a crude oil output of 806.3 million barrels, representing a decrease of 2.1% over the previous year, and a marketable natural gas output of 2,903.6 billion cubic feet, representing an increase of 0.8% over the previous year. Oil and gas equivalent output reached 1,290.4 million barrels, representing a decrease of 1.0% over the previous year. The Company's overseas oil and gas cooperation projects operated in a steady and efficient manner, with the five major overseas oil and gas cooperative regions further developed. In terms of overseas oil and gas exploration, the Company adhered to the principles of overall research, scientific evaluation and reasonable organization, and shifted its focus from increasing reserve volume to increasing quality reserves. The Company adjusted and optimized the output of the Aktobe and PK projects in Kazakhstan, and saw output of the Rumaila project in Iraq continue to increase. In 2015, the oil and gas equivalent output from overseas operations reached 203.5 million barrels, representing an increase of 38.3% from the previous year and accounting for 13.6% of the Company's total oil and natural gas equivalent output.
In 2015, the Exploration and Production segment continued to reduce costs and consumption, develop its potential and improve profitability through innovation and precise management, recording a profit from operations of RMB33,961 million.

Refining and Chemicals

In 2015, the Company closely followed market changes to optimize production processes, adjust its product structure, as well as to allocate resources and workload by giving priority to profitability. Meanwhile, by taking advantage of the favorable recovery of the chemical market, the Company allocated more resources to the chemical business, and increased the production of products with merchantability, high profitability and high added value. In 2015, the Company processed 998.1 million barrels of crude oil, of which 697.8 million barrels were the Company's self production, accounting for 69.9% of the total processing volume, demonstrating a good synergistic effect. It produced 91.933 million tons of refined products, with major indicators for comprehensive energy consumption recording a continuous drop and a number of technical and economic indicators remaining favorable. The Company strengthened its overall integration and optimization of its chemical product sales, expanded end-market sales channels and achieved stable growth in sales volume of high-margin products and in high-margin regions. The Company executed its key refining and chemicals projects in an orderly manner, and basically completed the construction of the main facilities of Yunnan Petrochemical. The oil products' quality upgrade projects were accelerated, enabling the Company to supply automobile gasoline and diesel meeting the China V standard to 11 eastern provinces and municipalities and other key regions.
In 2015, the Refining and Chemicals segment focused on the principle of market orientation and profitability, doubled up on its benchmarking and meeting of targets, and stepped up its control of costs and expenditure. As a result, the Refining and Chemicals segment achieved an overall turnaround, and recorded a profit from operations of RMB4,883 million, an improvement of RMB28,443 million over the previous year. Of this, refining operations recorded a profit from operations of RMB4,690 million, representing an improvement of RMB11,845 million over the previous year, as a result of the optimization of production and operations and the increase in gross profit from processing. Chemicals operations recorded a profit from operations of RMB193 million, representing an improvement of RMB16,598 million over the previous year, as a result of the optimization of product structure and cost and expense controls.

Marketing

In 2015, the Company proactively responded to unfavorable conditions for its domestic marketing operations, such as the slowing growth in demand for refined oil and lower market prices. It allocated oil products resources in a scientific manner, optimized the coordination of its production and sales, and enhanced its inventory management. The Company stepped up efforts to increase the sale and export of its self-refined products, with out-refined products procured and marketed at controlled level.  It emphasized profit through the retail business, rectified "low sales and low margin" service stations, made continuous improvements in sale capacity per service station, and built high-margin terminals. The Company strengthened its integrated marketing efforts to offer better customer service, and actively explored new business models such as "Marketing + Internet", which enabled the Company to continuously improve the quality and standards of its marketing services. Its marketing network was further enhanced with the addition of 292 new service stations. The total number of service stations operated by the Company reached 20,714. The Company's international trading operations continued to develop rapidly as it coordinated and optimized export and import resources, and took proactive actions to develop profitable high-end markets, which further enhanced the scale and quality of its international trading operations. Further, the Company made significant achievements in innovation, profit creation and market development.
In 2015, aimed at maximizing benefits of the value chain, the marketing segment optimized the coordination between production, sales and inventory management, reinforced cost and expense controls, and increased the profitability of non-oil businesses. However, due to unfavorable macro-economic factors including a domestic economic slowdown and subdued market demand, the marketing segment recorded a loss from operations of RMB500 million in 2015.

Natural Gas and Pipeline

In 2015, the Company undertook scientific planning of its oil and gas allocation and transportation, optimized the operations and management of its oil and gas pipeline network, and raised the operating efficiency of pipelines. Despite its natural gas sales facing growing volatility in seasonal demand in China, the Company balanced and optimized the resource allocation for its business chains, through arranging gas importation at the minimum level under the "take or pay" contracts, and by increasing the production of self-produced gas. The Company strengthened the management of demand, further developed key high-margin markets, and made continuous improvements to the quality and profitability of sales. The construction of key oil and gas pipelines made steady progress. The Tieling-Jinxi Crude Oil Pipeline, the extension of the Mohe-Daqing Pipeline and other projects were successfully put into operation. The construction of the eastern section of the Third West-East Gas Pipeline, the Jinzhou-Zhengzhou Refined Oil Pipeline and other projects proceeded steadily. As at the end of 2015, the Company had 77,612 km of domestic oil and gas pipelines, including 48,629 km of natural gas pipelines, 18,892 km of crude oil pipelines and 10,091 km of refined oil product pipelines.
In 2015, the Natural Gas and Pipeline segment strengthened its market development, continued to improve its sales capability and profitability, saw an increase in the volume and profitability from the sales of natural gas, and achieved a profit from operations of RMB51,231 million for 2015. Excluding RMB22,807 million investment income generated from the integration of certain pipeline assets in 2015, the profit from operations increased by RMB15,298 million over the previous year.

Outlook for 2016

The global economy is expected to make a weak recovery in 2016. In view of the oversupply in the global oil market, international oil prices will remain volatile and hover at low levels. However, China's economy is expected to achieve a moderate and stable growth, with oil and gas demand in China generally remaining in an uptrend. Underpinned by the "One Belt and One Road" initiative and accelerating reforms to the domestic oil and natural gas industry, the long-term growth of the Company will receive a boost.
The Company will adhere to its principle of steady development and endeavor to become a world-class global energy company. It will improve the value chains of its crude oil and natural gas business, optimize the structure of its core businesses, focus on the Exploration and Production business, and strengthen the Refining, Chemicals as well as Marketing businesses. It will also accelerate the development of the Natural Gas and Pipeline business, and coordinate the development of international trading operations, to enhance the Company's value driven by various business segments and ensure its sustainable development. We will overcome difficulties, proactively respond to severe challenges arising from low oil prices, and take the initiative to drive the Company's development, so as to better safeguard the interests of our shareholders.


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Additional information on PetroChina is available at the Company's website: http://www.petrochina.com.cn  
Issued by PetroChina Company Limited

For further information, please contact:
PetroChina Company Limited

Joint Company Secretary
Mao Zefeng                                                            Fax:(010)6209 9558
Tel:(010)5998 6262                                             E-mail:maozf@petrochina.com.cn

General Administration Department
 (original PR Department):
Yuan Xinxiang                                                       Fax: (8610) 6209 9558
Tel: (8610) 5998 6037                                         E-mail: yuanxx@petrochina.com.cn

PR Agency (Overseas media):
Hill+Knowlton Strategies                                     Fax: (852) 2576 1990
Benny Liu                                                               Tel: (852) 2894 6315
                                                                                 E-mail: benny.liu@hkstrategies.com

PR Agency (Domestic media):
EverBloom Investment Consulting Lt. Co.       Fax: (8610) 8562 3181
Shen Di                                                                  Tel: (8610) 5166 3828
                                                                                 E-mail: di.shen@everbloom.com.cn