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BEIJING: PetroChina will consider taking part in national oil giant Saudi Aramco’s initial public offering based on market conditions, it said on Thursday, the second Chinese oil major to discuss becoming an investor this week.
“Saudi Aramco has raised this plan to PetroChina,” Wang Dongjin, president and vice-chairman, said at a briefing following the announcement of China’s largest oil and gas producer’s 2016 results.
“I think we will make our evaluation and study based on the market situation,” Wang said.
On Monday, Sinopec said the Saudi Aramco president had visited the firm and both sides would have talks on the IPO, which is expected to be the world’s largest equity sale.
Wang said PetroChina was also in talks with Saudi Aramco on its Yunnan Petrochemical plant and about the possibility of supplying its enhanced oil recovery technology to Saudi oil fields.
“We are also having discussions on the joint venture Yunnan Petrochemical. We are making very active progress,” he said.
Sources told Reuters in 2015 that Saudi Aramco was looking to invest more than $1 billion in its new refinery in the country’s southwest.
The company expects oil prices to range between $50-$58 per barrel this year, recovering from the multi-year lows hit early in 2016.
PetroChina’s crude oil production fell 5.3 percent to 920.7 million barrels in 2016 — still the highest among global oil producers including BP and Shell — but marking the lowest for PetroChina since 2012, according to Reuters data. The state company’s crude oil output peaked in 2015 at 972 million barrels.
In its annual report, the company said domestic gasoline demand was lower than expected, while diesel consumption fell.
“The situation of excessive supply in domestic refined products became severe” last year, it said.
“The quantity of imported and processed crude oil, operating capacity, and market shares of local refineries (all) increased significantly, leading to fiercer market competition.”
PetroChina has reported a drop of 78 percent in 2016 annual net profit, to its lowest since at least 2011, as it was hit by lower prices for crude oil and natural gas.
The shrinking profits posted by China’s state oil and gas producers for last year have highlighted their growing challenges from falling output at aging wells and excess supply in domestic fuel oil markets.
PetroChina’s net profit sank to 7.86 billion yuan ($1.14 billion) from 35.7 billion yuan in 2015, while revenue fell 6.3 percent to 1.62 trillion yuan ($235 billion), based on IFRS accounting standards.
PetroChina’s total oil and gas output for the year was 1.47 billion barrels of oil equivalent, down 1.8 percent from 2015.
PetroChina had 7.44 billion barrels of proven crude oil reserves, down 12.7 percent from 2015, it said.
PetroChina’s smaller upstream competitor CNOOC — a specialist in offshore operations — earlier reported its worst result since 2011, but forecast its output to rise this year.
Profits at Sinopec — Asia’s largest refiner — rose 44 percent from a year earlier on the back of strong performances in refining and chemicals.
Sinopec’s oil and gas production in 2016, however, fell 8.6 percent to 431.29 million barrels of oil equivalent versus 471.91 million a year earlier.