PetroChina 2012 Net Below Forecast; Company Aims to Speed Overseas Expansion

PetroChina Co. aims to speed up overseas acquisitions, exploration and production even after its net profit lagged behind analysts' expectations, as China's largest listed oil company by output hopes to secure more resources to feed domestic demand.

Beijing-based PetroChina aims to produce 200 million metric tons (220 million short tons) of oil and gas a year by the end of 2015, 10% more than the record 181.8 million tons produced last year, Vice President Sun Longde said Thursday.

The company is seeking acquisition targets in Central Asia, the Middle East, North America, Africa and Asia, Mr. Sun said, but he didn't name any targets.

"Over the next three years, we will continue to increase our international presence. Overseas production will account for 50% of the company's total oil and gas production by 2015 [versus 10% last year]," Mr. Sun said.

The ambitious plan is an extension of former Chairman Jiang Jiemin's push to expand beyond China's shores. Mr. Jiang resigned as chairman of PetroChina and parent China National Petroleum Corp. on Monday to head China's State-owned Assets Supervision and Administration Commission. The change is effectively a promotion for Mr. Jiang, as he will now oversee all of China's nonfinancial state-owned assets, including PetroChina and CNPC.

Since 2007, CNPC has invested $12 billion in oil and gas projects in Canada, Australia, the U.S. and France, according to data provider Dealogic. PetroChina is speeding up exploration and production of natural gas, in response to a sharp rise in domestic gas consumption because of the government's push to encourage the use of cleaner fuels.

However, its natural-gas business has been incurring losses since last year, because it procures expensive natural-gas imports that it must sell at government-set prices that are lower than import costs.

Its natural-gas and pipeline business swung to an operating loss of 2.11 billion yuan ($339.5 million) in 2012, from an operating profit of 15.5 billion yuan.

Mr. Sun said he is positive about China's natural-gas market this year, as the Chinese government could roll out a new pricing mechanism and increase domestic gas prices.

"We suffered a total of 41.9 billion yuan in losses from importing piped natural gas from Central Asia last year. As gas imports have dented our profitability, we expect the government to accelerate natural-gas-pricing reforms," he said.

PetroChina's revenue rose 9.6% to 2.2 trillion yuan in 2012 due to increases in oil and gas output. However, its net profit fell 13% to 115.33 billion yuan from 132.96 billion yuan in 2011, because of losses from its natural-gas and refining businesses. It was below the average 125.1 billion yuan forecast of analysts polled by Thomson Reuters.

Analysts expect domestic refining margins to improve in the first quarter after the government raised domestic gasoline and diesel prices by 3.5%-3.8% in late February. The government will likely implement a new fuel policy in the near term, they said.

High crude costs squeezed its downstream refining and chemical operations last year as China's fuel-pricing system prevents refiners from passing on cost increases to consumers.

To contain inflation, the government often forces the two largest refiners—PetroChina and China Petroleum & Chemical Corp., or Sinopec—to maintain prices for refined products even when crude-oil prices surge in the global market.