PetroChina foots steep windfall bill


PetroChina, the world's fourth-largest oil and gas producer, will pay 30 billion yuan (US$3.75 billion) in windfall tax for the full year, or 22 per cent of its yearly profit in 2005, its vice-chairman Jiang Jiemin said on Aug 23. But analysts said the company could still manage to boost its bottom line thanks to soaring crude prices and sturdy demand.

Their comments came after China's top oil firm yesterday posted a 29 per cent rise in its net profit for the first half, a record since it listed in 2000, as hovering oil prices helped offset the windfall tax payment. Such robust growth could continue in the remainder of the year, as "crude prices see no sign of abating" on Middle East tension and growing global demand, said Andes Cheng, an analyst at South China Research Ltd, who put PetroChina's full-year growth rate at 25 per cent.

Oil prices clung to US$70 a barrel in the first half and fluctuated between HK$70 and HK$80 a barrel in the second half of the year. PetroChina paid windfall tax worth 10.3 billion yuan (US$1.29 billion) in the first half after the "special revenue tax" began in March as part of the mainland's oil pricing system reform.

But a 21-per-cent jump in oil prices from January to June helped PetroChina rake in 80.6 billion yuan (US$10.12 billion) versus a marginally revised 62.4 billion yuan (US$7.8 billion) a year earlier. Its turnover jumped to 326.5 billion yuan (US$40.8 billion) in the first half, up from 261 billion yuan (US$32.6 billion) a year ago.

The mainland is striving to reform its oil pricing system, to bring refined oil product prices, now far below global prices, into line with the international market, causing big losses to refiners such as Sinopec. The government announced the windfall tax on oil producers and a price hike of petroleum retail prices in the first half to subsidize refiners and other affected sectors. Analysts generally believe there could be one or two more price hikes this year.

PetroChina pumped 6.8 per cent more oil and gas in the first half, while crude and gas output rose to the equivalent of 533.2 million barrels of oil, the company said in July. And the firm will produce more, with its newly acquired PetroKazakhstan to start contributing.

Jiang said PetroChina agreed to buy a 67-per-cent stake in PetroKazakhstan from its parent firm China National Petroleum Corp in a joint venture deal worth US$2.7 billion, due for completion "within the year." "We aim at a 5 per cent annual output increase for PetroKazakhstan in the next five years," said Jiang.

The firm also said the oilfield in Daqing, one of its oldest and its flagship oil producer, would produce more than 40 million tons of oil and gas annually by 2010, refuting suggestions that it is depleted and making big losses.

The Hong Kong and New York-listed firm is also in a worldwide search for partners and plans to list in Shanghai and other overseas bourses to bankroll more acquisitions outside the Chinese mainland, but did not give details or a timeframe. Shares in PetroChina rose nearly 31 per cent in the first six months of the year.


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