PetroChina Wednesday announced a record financial performance for last year with net profits rising 48 percent from the year before to 69 billion yuan (US$8.3 billion).

Turnover at one of the world's largest petrochemical companies rose a quarter to 304 billion yuan (US$36.7 billion).

"This is (our) best-ever performance (since its international flotation four years ago)," Chen Geng, president of the company, said. "The company fully met and surpassed all production and operational targets."

Higher crude prices were the key contributor - about 30 percent - to the improved 2003 operating profit, which rose 37 percent to 99 billion yuan (US$12 billion). Oil prices last year rose 21 percent to an average of US$27.19 a barrel on strong domestic demand and global tensions.

But, there were other reasons as well: a slower rise in operating and other expenses and a much smaller net exchange loss.

PetroChina operates four primary divisions: upstream production, downstream refining, chemicals, and natural gas and pipelines: All four were profitable last year, with chemicals reversing a 3-billion-yuan (US$362 million) loss in 2002 to a 1-billion-yuan (US$121 million) operating profit.

PetroChina returned almost 21 percent on equity, compared with 15 percent earlier. It proposed a dividend of 0.08 yuan a share, a level within its payout ratio target of 40 to 50 percent.

This year's crude production volume would be maintained at last year's 775 million barrels (2.1 million barrels per day), while natural gas production is expected to rise by 12 percent to more than 770 billion cubic feet.

The big operational change will be in crude oil processing, which could rise from 621 million barrels last year to an unconfirmed 870 million barrels.

PetroChina's refineries handled 86 percent of its internal crude production last year, and without any increase in domestic upstream output, the company would have to import more oil to feed its processing appetite of 2.4 million barrels per day (bpd).

Net crude oil imports, according to the company, rose by a third last year to the equivalent of almost 82 million tons.

China, a net crude importer since 1993, consumes more than 5 million bpd, the equivalent for all of Latin America, and more than that of Germany and France combined.

PetroChina has, however, grown in stature as an international upstream player, with a 45 percent interest in an offshore Indonesian block known as Jabung.

Jabung, with 33 million barrels in recoverable oil and gas reserves, is expected to yield 18 million barrels, 7.68 million of which would go to PetroChina, the company said Wednesday.

To satisfy domestic consumption, PetroChina is also strengthening its delivery systems. It operates more than 26,000 kilometers of pipelines, part of which is the west-east gas line due for completion in October with commercial delivery three months later. The Zhongxian-Wuhan line will also be ready for commercial gas supply in December.

PetroChina said its capital expenditure this year would remain the same as last year at 84 billion yuan (US$10 billion).

(China Daily March 25, 2004)