HONG KONG -- Earnings at China's three leading listed oil companies rebounded in the first six months of 2017 as petroleum prices picked up and cost-cutting took pressure off margins.
Combined net profit jumped 350% on the year to 56.7 billion yuan ($8.59 billion), propelled by a huge gain at PetroChina as the oil and gas producer's bottom line grew 24-fold to 12.6 billion yuan. Net profit at refiner China Petroleum & Chemical, or Sinopec, rose 40% to 27.9 billion yuan. Offshore driller CNOOC swung to a 16.2 billion yuan profit from a 7.7 billion yuan loss.
PetroChina enjoyed an average crude price of $50 a barrel during the half, a 50% improvement over a year earlier. Higher crude prices lifted margins in upstream operations despite a combined 1% decline in oil and gas production by the trio. Sinopec Chairman Wang Yupu predicts that the current level of crude prices will be the norm for the next one to two years.
Cuts to expenses pushed through while crude prices were down paid off. CNOOC's production and distribution costs fell 9% from a year earlier to $32 per barrel. "Earnings were higher than expected not only because of crude oil prices, but also because of a large contribution from cost reductions," Chairman Yang Hua said.
PetroChina plans to scale up test drilling for methane hydrate, an icelike form of natural gas, in the South China Sea. Vice Chairman and President Wang Dongjin said the company will work toward a goal of beginning commercial production in 2030. If successful, Wang said, the methane hydrate deposits could last two centuries.