PetroChina Co., a Chinese oil and gas company has forecast on Wednesday that its output will slide 2.7% this year to 1.45 billion barrels. The listed arm of China National Petroleum Co. is going to witness fall in output for the first time in 17 years following shutting down high cost fields which are unable to make profits at current prices.
Cut in output has been forecast by Wang Dongjin, the company President following announcement of lowest income since its enlistment for getting traded publicly. The current oil price level leaves PetroChina with very little opportunity but to give up the oil fields. The forecast output decline is the direct consequence of PetroChina's plan for shutting down aging and high cost fields, reports Bloomberg quoting Laban Yu, head of Asia oil and gas equities at Jefferies Group LLC in Hong Kong.
PetroChina is the largest oil and gas company of China by assets and world's second largest oil company by market capitalization. The oil conglomerate's net profit has dropped 67% to ¥35.5 billion during 2015. Net profit has been slashed following long prevailing lower oil prices and asset impairments of several billion dollars, according to a report published in The Wall Street Journal.
Net profit has been slashed from ¥107.17 billion, recorded the year earlier. However, the decrease in net profit appears in line with its earlier prediction for 70%. Ignoring the complicated and severe domestic and international economic environment, PetroChina has been able to keep control over its production and operations, reports BBC. PetroChina has reported sell of ¥1.73 trillion accounting a 24% decrease. However, the largest Chinese oil and gas company expects a slight reprieve this year while adopting the cost cutting measures including shutting down the high cost fields. Share price of PetroChina has fall 4.3% to HK$ 5.14 which may be compared to 1.3% drop in the city's benchmark Hang Seng Index. The stock has lost 37% value during the past year compared to 17% decline in broader index. PetroChina's output cut plan may be helpful for swelling of global oil supply and nudge prices higher from the 12-year low. However, the International Energy Agency observes that the global oil glut may be a past, considering supplies outside the OPEC countries and supply disruptions in member countries.
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