China's top oil and gas producer witnessed slackening growth in the first half of this year as a result of rising operating costs and lower crude prices.

But PetroChina, Asia's top oil company by market value, still managed to post a slim rise in net profit, beating analysts' forecasts of negative growth.

From January to June, PetroChina's net income was up 1.4 percent to a record 81.83 billion yuan from 80.68 billion yuan a year earlier, the company said in a statement yesterday.

"It (the net profit figure) doesn't sound like much but it's actually a very strong result since crude oil prices have gone down over the last few months, and rising costs make it all the more difficult," said Castor Pang, a strategist with Sun Hung Kai Financial Group, a securities consulting firm in Hong Kong.

For the six months ended June 30, PetroChina recorded a turnover of 392.73 billion yuan, up 20.3 percent year-on-year. The half-year operating profit reached 109.13 billion yuan, recording a decrease of 5.3 percent year-on-year.

"The decrease in operating profit was due to various factors including the special levy imposed by the State, increased expenses for safety, the company's business expansion and the surge in commodity prices," PetroChina said.

Witnessing a falling operating profit, PetroChina must have spared no efforts to lower its financial expenses to maintain a positive net profit growth, said Yin Xiaodong, an oil analyst at CITIC Securities Co.

According to PetroChina's statement, the increase in net profit primarily resulted from the company's reassessment of its taxation position following the requirements of the Corporate Income Tax Law.

PetroChina's refining and marketing segment achieved a turnaround during the first half. The segment recorded an operating profit of 3.93 billion yuan, representing an increase of 17.82 billion yuan over the same period of 2006.

Since most of the crude for refining comes from PetroChina's own production, the firm is less vulnerable in the face of rising global crude prices and low prices of domestic oil products, according to analysts.

PetroChina is positive about its business prospects in the second half of this year.

"Crude prices remained at a good level in July. A rebound in prices will fuel earnings growth for PetroChina in the second half," said Pang from Sun Hung Kai Financial Group.

(China Daily August 24 2007)