Weak demand for refined oil, gas hits CNOOC, PetroChina

The CNOOC booth at the 2014 Offshore Technology Conference held in Houston, the United States, in May. China's largest offshore oil and gas producer reported a 2.3 percent drop year-on-year in its first-half net profit to 33.6 billion yuan ($5.47 billion). [Photo/China Daily]

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Leading oil and natural gas companies PetroChina Co Ltd and CNOOC Ltd reported first-half results on Thursday that reflected weaker demand for refined products.

CNOOC, the largest domestic offshore oil and gas producer, recorded a 2.3 percent year-on-year decline in first-half net profit to 33.6 billion yuan ($5.47 billion).

Commenting on the profit drop, Chief Financial Officer Zhong Hua said increased selling prices had failed to offset higher production costs.

The company's average oil price was $106.30 a barrel in the first half, up 2 percent, while the average gas price rose 13.5 percent year-on-year to $6.44 per 1,000 cubic feet.

The operating cost was $11.78 per barrel of oil equivalent, up 7 percent, mainly attributable to the consolidation of two more months of Canada-based Nexen Inc's performance, according to the report.

The company's all-in cost was $43.20 per BOE, up 2 percent year-on-year.

CNOOC closed its $15.1 billion acquisition of oil and gas producer Nexen in February 2013, a deal intended to raise the parent's annual output by 20 percent and proven reserves by 30 percent.

Chief Executive Officer Li Fanrong said the company will continue to improve its asset structure.

Separately, PetroChina, the country's largest oil and gas explorer, reported net profit growth of 4 percent to 68 billion yuan.

Helped by the central government's gas pricing reform, PetroChina's gas and pipeline segment achieved first-half operating profit of 4 billion yuan.

Excluding year-earlier gains from divestment of pipeline assets and operations, the segment's operating profit was up 7 billion yuan.

Crude output edged up 0.2 percent to 500 million barrels and oil product output increased 1.9 percent to about 46 million metric tons.

The refining and chemical segment remained in the red with an operating loss of 3.4 billion yuan, but that represented a narrowing of the division's loss by 12.4 billion yuan from a year earlier.

Crude oil output from overseas operations totaled 56.2 million barrels, and marketable natural gas output reached 65 billion cubic feet.

The oil and natural gas equivalent output was 67.1 million barrels, on par with the year-earlier volume, the company said.

The company said that prospects for the mild recovery of the global economy will remain highly uncertain in the second half and global oil prices will face downward pressure.