Chinese oil majors record drop in profit, revenue

China oil companies reported decline of net profit and revenue in the first quarter earnings, as the coronavirus epidemic hurt fuel consumption and resulted in collapsing oil prices.

China Petroleum and Chemical Corp reported a 19.15 billion yuan ($2.71 billion) net loss in first-quarter earnings, compared with 14.76 billion yuan net profits in the first quarter of 2019.

Refinery throughput fell 13 percent year-on-year to 53.74 million tons, or about 4.31 million barrels per day, as the coronavirus curtailed demand for refined oil products.

The unaudited oil and gas sales revenue of CNOOC Limited dropped to 39.95 billion yuan during the period, down 5.5 percent year-over-year, also due to the combined effect of lower realized oil price and increased oil and gas sales volume, according to the company.

Average realized oil price fell by 19.3 percent year-over-year to $49.03 per barrel during the first three months, which was in line with the trend of international oil prices, it said. Average realized gas price reached $6.38 per thousand cubic feet, down 7.3 percent year-over-year, primarily due to the declined gas price in North America.

"The global oil and gas market was facing an unprecedented situation in the first quarter of 2020 due to the COVID-19 pandemic and sharp drop of international oil prices," Xu Keqiang, CEO of the company, said.

He said the company would take proactive measures to face the challenges and strive to mitigate the impact in response to an increasingly complex external environment, with more stringent cost controls and cash flow management to be implemented for the rest of the year.

The company's capital expenditure reached about 16.90 billion yuan for the first quarter of 2020, up 20.1 percent year-over-year, as a result of the increased workloads.

Under the current low oil price environment, the company said it has adjusted its operating strategy promptly and implemented more prudent investment decision to ensure its long-term sustainable development. It has reduced its annual net production target for 2020 from 520-530 million barrels of oil equivalent to 505-515 million barrels of oil equivalent and total capital expenditures for 2020 from 85-95 billion yuan to 75-85 billion yuan.

CNOOC Limited reported a total net production of 131.5 million barrels of oil equivalent for the first quarter of 2020, representing an increase of 9.5 percent year-over-year, with production from China increasing by 9.7 percent year-over-year to 87.1 million barrels of oil equivalent, thanks to the commencement of new projects and the acquisition of China United Coalbed Methane Corporation Limited.

With production contribution of new projects including Egina oilfield in Nigeria and Appomattox oilfield in the US Gulf of Mexico, overseas production increased by 9.0 percent year-over-year to 44.5 million barrels of oil equivalent, it said.