PetroChina may venture abroad to meet targets
Monday, January 20, 2003
biz.scmp.com
ERIC NG
PetroChina - the mainland's No 1 oil producer - may embark on a series of overseas acquisitions as it seeks to meet ambitious production targets for the three years to 2005, according to analysts.
The oil giant wanted to boost oil and gas production volume at an annual average rate of 5 per cent in the next three years, a Web site sponsored by the company's parent China National Petroleum Corp (CNPC) quoted PetroChina president Chen Geng as saying.
That may require a substantial boost in the company's overseas operations, likely to be satisfied mainly by acquisitions.
Average annual growth was 0.77 per cent in the past three years, as declining output from the country's No 1 oil field in Daqing in northeast China was counter-balanced by higher output elsewhere.
PetroChina's total oil and gas output grew 0.2 per cent year on year in 2000, 1.1 per cent in 2001 and 1 per cent last year.
The new three-year oil and gas output growth target included more than 20 per cent annual growth in natural gas production.
This is much faster than the 11.5 per cent growth recorded in 2001, and 15.6 per cent in 2000.
Analysts said that because of the lack of growth in domestic oil fields, substantial acquisitions would be needed to achieve the firm's three-year production targets. Mr Chen underlined in his speech on PetroChina's strategy to bolster reserves, this was possible only "by strengthening international exploration and development co-operation in order to compensate for the lack of oil and gas reserves in China".
PetroChina and CNPC have been in talks with Russian firms to build a 30 million tonne per annum Siberia-northeast China crude oil pipeline.
Analysts speculated that CNPC could be the main builder of the Chinese side of the pipeline, while PetroChina would bargain for a right to buy into fields supplying the pipeline to bolster reserves and production.
HSBC Securities analyst Gordon Kwan said Beijing's signing of a treaty of friendship last month with ex-Soviet Union member Kazakhstan could give PetroChina a toehold in tapping Kazakhstan's rich reserve.
While giant oil field discoveries had been made in Kazakhstan's Caspian region, its landlocked geography and lack of infrastructure meant it accounted for only 1.4 per cent of China's total oil imports - compared with Saudi Arabia's 16.3 per cent and Iran's 16.2 per cent, he said. Mr Chen was also quoted as saying PetroChina would strive to achieve an average 7 per cent annual rise in turnover from this year to 2005, and maintain a return on investment of more than 10 per cent. It aimed to find more proven oil and gas reserves than the amount it produced in the next three years.
In 2001, the company added proven oil and gas reserves equivalent to 1.4 billion barrels of oil, much higher than its total production of 857.4 million barrels.
PetroChina had world-class oil and gas reserves, Mr Kwan said. At the end of 2001, it had reserves equivalent to 17 billion barrels of oil, compared with ExxonMobil's 21 billion, Royal Dutch/Shell's 19.5 billion and BP's 18 billion.
China's No 2 oil producer China National Petroleum & Chemical had only 3.79 billion barrels and No 3 producer CNOOC 1.8 billion. On oil-refining operations, Mr Chen said PetroChina had set a goal of increasing operating profit by more than 10 per cent this year.
Last week, it said it processed 568.7 million barrels of oil last year, up 0.3 per cent from 2001.
PetroChina aimed to turn chemicals production losses into a profit this year, and would strive to post "significant" rises in profits next year and in 2005.
The chemicals division posted an operating loss of 2.37 billion yuan (about HK$2.22 billion) in 2001 and a loss of 668 million yuan in the first half of last year.
Mr Chen was quoted as saying the 4,000km West-to-East gas pipeline was aimed at piping gas to its first users in Shanghai on October 1. The project, in which the company has a 50 per cent stake, will connect gas fields in Inner Mongolia to Shanghai. |
