Chi­nese oil com­pany moves ahead ofexxon

Petrochina pumps 2.4 mil­lion bar­rels per day

The Washington Times Daily - - Nation - BY CHRIS KAHN

NEW YORK | A big shift is hap­pen­ing in Big Oil: An Amer­i­can gi­ant now ranks be­hind a Chi­nese up­start.

Exxon Mo­bil is no longer the world’s big­gest pub­licly traded pro­ducer of oil. For the first time, that dis­tinc­tion be­longs to a 13-year-old Chi­nese com­pany called Petrochina. The Bei­jing com­pany was cre­ated by the Chi­nese gov­ern­ment to se­cure more oil for that na­tion’s boom­ing econ­omy.

Petrochina an­nounced Thurs­day that it pumped 2.4 mil­lion bar­rels a day last year, sur­pass­ing Exxon by 100,000. The com­pany has grown rapidly over the last decade by squeez­ing more from China’s ag­ing oil fields and out­spend­ing Western com­pa­nies to ac­quire more petroleum re­serves in places like Canada, Iraq and Qatar. It’s mo­ti­vated by a need to lock up as much oil as pos­si­ble.

The com­pany’s out­put in­creased 3.3 per­cent in 2011 while Exxon’s fell 5 per­cent. Exxon’s oil pro­duc­tion also fell be­hind Rus­sian com­pany Ros­neft.

Petrochina’s rise high­lights a fun­da­men­tal dif­fer­ence in how the largest petroleum com­pa­nies plan to sup­ply the world as new de­posits be­come tougher to find and more ex­pen­sive to pro­duce.

Ev­ery ma­jor oil com­pany has ag­gres­sively pur­sued new finds to re­place their cur­rent wells. But an­a­lysts say Western oil firms like Exxon Mo­bil have been more con­ser­va­tive than the Chi­nese, mind­ful of their bot­tom line and in­vestor re­turns. With oil prices up 19 per­cent in 2011, they still made money with­out in­creas­ing pro­duc­tion.

Petrochina Co. Ltd. has a dif­fer­ent mis­sion. The Chi­nese gov­ern­ment owns 86 per­cent of its stock and the na­tion uses nearly ev­ery drop of oil Petrochina pumps. Its ap­petite for gaso­line and other petroleum prod­ucts is pro­jected to dou­ble be­tween 2010 and 2035.

“There’s a lot of anx­i­ety in China about the en­ergy ques­tion,” en­ergy his­to­rian Dan Yer­gin said. “It’s just grow­ing so fast.”

While Petrochina sits atop other pub­licly traded com­pa­nies in oil pro­duc­tion, it falls well short of na­tional oil com­pa­nies like Saudi Aramco, which pro­duces nearly 8 mil­lion bar­rels a day. And Exxon is still the big­gest pub­licly traded en­ergy com­pany when count­ing com­bined out­put of oil and nat­u­ral gas. Petrochina ranks third be­hind Exxon and BP in to­tal out­put of oil and nat­u­ral gas.

Petrochina is look­ing to build on its mo­men­tum in 2012.

“We must push ahead,” Petrochina Chair­man Jiang Jiemin said in Jan­uary.

Petrochina has grown by pump­ing ev­ery­thing it can from re­serves in China, es­ti­mated to con­tain more than 6.5 bil­lion bar­rels. It drilled thou­sands of oil wells across vast stretches of the na­tion’s north­ern grass­lands. Some of those fields are an­cient by in­dus­try stan­dards, dat­ing close to the be­gin­ning of China’s com­mu­nist gov­ern­ment in the 1950s.

The com­mit­ment to ag­ing fields dis­tin­guishes Petrochina from its big­gest Western ri­vals. Exxon and other ma­jor oil com­pa­nies typ­i­cally sell their ag­ing, low-per­form­ing fields, or they put them out of com­mis­sion.

Petrochina also has been on a buy­ing spree, ac­quir­ing new re­serves in Iraq, Australia, Africa, Qatar and Canada. Since 2010, its ac­qui­si­tions have to­taled $7 bil­lion, about twice as much as Exxon, ac­cord­ing to data provider Dealogic.

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