PETROCHINA Ltd, China's biggest oil company, said yesterday its first quarter profit plunged 31.5 percent due to government controls that bar it from passing on record crude costs to consumers.
Profit was 28.8 billion yuan (US$4.1 billion) for the three months ending March 31, according to PetroChina, the publicly traded arm of government-owned China National Petroleum Corp.
At a time when global oil giants are reporting record profits, Chinese producers are suffering heavy losses blamed on government controls that have frozen retail gasoline and diesel prices while suppliers must pay rising market prices for crude. PetroChina and No. 2 oil company, Sinopec, have been forced to cover losses out of profits from their drilling units.
PetroChina said first-quarter revenue jumped 41.9 percent over the same period of 2007 to 259 billion yuan (US$37 billion). Sales of gasoline, diesel and kerosene rose 18.5 percent, driven by China's economic boom and spreading car ownership.
Sinopec said on Sunday its first-quarter profit fell 69 percent. Sinopec, also known as China Petroleum & Chemical Corp, has been hit harder because it is Asia's biggest refiner by volume, while PetroChina produces more oil than it refines and has gained from rising crude prices. PetroChina gave no details of its losses but said earlier the unit has lost money since last year.
Both firms said last week the government would pay them subsidies to cover refining losses.
Sinopec said it got a 7.4 billion yuan state subsidy to cover refining losses in the first quarter, but PetroChina has yet to report getting a similar payment.