Oil Majors Log Higher Profits, Revenues in First 9 Months

CNPC employees conduct maintenance work at a gas station in Suining, Sichuan province, in January. [Liu Changsong/For China Daily]

Experts: Surging demand led by global economic recovery boosts drillers' sales

China's top three major oil and gas companies saw their revenue increase during the first three quarters on the back of an economic rebound from the COVID-19 pandemic and the rapid recovery of the petrochemical products market in the country.

China National Petroleum Corp, the country's largest oil and gas company, reported revenue of 1.88 trillion yuan ($294.27 billion), an increase of 31.8 percent year-on-year. Net profit hit 75.13 billion yuan, up 646.3 percent year-on-year.

China Petroleum and Chemical Corp, known as Sinopec and the world's largest refiner by volume, announced its net profit during the first three quarters reached 60.76 billion yuan, soaring by 148.5 percent year-on-year. The company's operating income in the first three quarters reached 2 trillion yuan, a rise of 29 percent year-on-year.

China National Offshore Oil Corp, the country's top offshore oil and gas driller, said its unaudited oil and gas sales revenue reached about 58.03 billion yuan, an increase of 63.3 percent year-on-year, mainly due to the combined effects of increases in international oil and gas prices and higher oil and gas sales volume.

Experts attributed the revenue growth of the drillers to the rebound in demand caused by the global economic recovery, the rising average price of international crude oil, and steady expansion of China's economy.

In addition, China's three national oil companies continued to increase natural gas output ahead of winter by between 6.5 percent to 14 percent year-on-year in the first three quarters, said Li Ziyue, an analyst with BloombergNEF. Domestic demand for natural gas continued to grow rapidly, with apparent consumption up 16.6 percent year-on-year.

"Rising oil prices also improved cash flows for the three oil giants, which can translate into more investment in production," she said. "However, surging price is also a double-edged sword. Skyrocketing liquefied natural gas imports have eroded companies' profits."

Li added the country's three major oil and gas players have accelerated exploration investment intensity during the past few years with a series of major breakthroughs, and this will guarantee energy security in the country.

Apart from Sinopec, which strengthened risk exploration in new regions and sectors during the past nine months and harvested new discoveries in the Tarim, Sichuan, and Erdos Basins, as well as major breakthroughs in continental shale oilfields of the Bohai Bay, Sichuan and North Jiangsu Basins, CNOOC has also made nine new discoveries and successfully appraised 13 oil and gas structures.

CNPC said the company, relying on technological innovation, has also stepped up efforts to promote highly-efficient exploration and development to stabilize oil and increase gas supplies, boost the economically recoverable reserves and facilitated stable production in mature oil and gas fields, including the start of new projects including the Caofeidian 6-4 oilfield, the Luda 21-2 oilfield and production growth from onshore unconventional gas fields.

Their mastery of oil and gas exploration technology in China has also been on the rise, which injects momentum into the reform of the country's future oil and gas systems and mechanisms.

The major oil companies are also stepping up capital expenditure during the nine months. CNOOC increased its capital expenditure by 13.8 percent year-on-year to approximately 20.94 billion yuan, which was mainly due to the increase in workload. CNPC reported its exploration and production business achieved an operating profit of 58.369 billion yuan, an increase of 191.8 percent year-on-year.

Sinopec also optimized its investment management system with total capital expenditures of 89.7 billion yuan in the first three quarters of this year, with the exploration and production segment at 38.6 billion yuan, mainly for the capacity building of the Shunbei oilfield, and the Weirong, Fuling, and Western Sichuan natural gas projects.

The three major oil and gas companies are also shifting their focus from fossil fuel energy to the new energy business as China vows to achieve carbon neutrality by 2060 and peak carbon emissions by 2030.