Chinese oil and gas giant PetroChina reported on Wednesday a 58-percent plunge in its third-quarter profit as lower oil prices, fierce domestic fuel competition, and slowing gas demand growth weighed on earnings.
PetroChina booked a net profit of US$1.25 billion (8.83 billion Chinese yuan) in Q3, down by 58.4 percent from the same period last year, missing analyst estimates. Revenues in the third quarter were slightly up-1.8 percent- from a year ago, but they were still below expectations, pushing the company's stock price down by 4.33 percent.
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This past quarter's results are PetroChina's weakest so far this year, despite the fact that the company boasted increased exploration activity and shale gas reserves.
For the first nine months of the year, PetroChina's net profit slumped by 23.4 percent on the year.
PetroChina's operating and net profits in both Q3 and the first nine months of the year were hit by expanding overcapacity and fierce competition in China's refining sector.
Chinese refiners are already producing more fuels than the domestic market needs and the resulting surge in exports is depressing refiners' margins both at home and in neighboring countries. China's refined products glut is the result of weakening demand and expansion of refining capacity in recent months.
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"The domestic refined products market was of abundant supply and demand, with intensified overcapacity and fierce competition," PetroChina said in its results release today, adding that falling oil prices this year and weakening natural gas demand additionally weighed on the profits in Q3 and in January to September.
"The market demand for natural gas continued to grow but at a slowing-down rate," the company admitted.
PetroChina's upstream segment continues to be a pillar of growth for the company, but the operating profits at the refining and chemicals businesses declined on weaker prices, Martin Mou at Dow Jones said in an earnings review after the results release.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews. More