China's oil giants hit hard by oil slump

The Pak Banker - - COMPANIES/BOSS -

BEI­JING: Plung­ing global crude oil prices crimped 2015 earn­ings for China's trio of oil com­pa­nies, ac­cord­ing to their an­nual re­ports. China Na­tional Off­shore Oil Cor­po­ra­tion (CNOOC), China's largest off­shore oil and nat­u­ral gas de­vel­oper, made 20.2 bil­lion yuan ($3.1 bil­lion) in net prof­its last year, plung­ing 66.4 per­cent year on year.

Net prof­its of PetroChina Co Ltd, China's top oil and gas pro­ducer, shrank 66.9 per­cent to 35.52 bil­lion yuan in 2015, the lowest profit since 1999. Sinopec, China's largest oil re­finer, saw its net prof­its de­cline 30 per­cent year on year to 32.4 bil­lion yuan in 2015.

The con­tin­ued slump in global crude oil prices, down­ward pres­sure on the do­mes­tic econ­omy and slug­gish de­mand for oil and gas have caused the profit plunge for the oil giants, said Dong Xi­ucheng, pro­fes­sor with China Univer­sity of Petroleum. Brent crude, the bench­mark for more than half the world's oil, plunged 48 per­cent last year, forc­ing pro­duc­ers and drillers from the US to Asia to slash spend­ing and cut staff.

Mean­while, China's econ­omy, the world's sec­ond largest, grew 6.9 per­cent last year, the lowest in a quar­ter of a cen­tury. To cope with the sag­ging oil prices and sub­dued eco­nomic growth, these oil com­pa­nies need to fur­ther cut costs and op­ti­mize as­sets, said Dong. PetroChina chair­man Wang Yilin said that the com­pany had taken proac­tive mea­sures to cope with the plunge in oil prices and em­pha­sized cost re­duc­tion and ef­fi­ciency im­prove­ment. The com­pany will con­tinue to stream­line its sales strate­gies by fo­cus­ing on pri­or­i­tized re­gions and high-mar­gin prod­ucts, shut­ting down oil and gas fields that have no hope of mak­ing prof­its, said Wang.

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