Analysts believe the outstanding performance of China's three major oil companies is expected to continue in the next six months, as oil prices surge and oil companies worldwide gradually recover from the sector's two-year crash.

China National Petroleum Corp, or PetroChina, the nation's largest oil producer and supplier, said recently that its net profit in the first half more than doubled. It cited rising oil prices, cost reductions and efficiency improvement.

Net profit reached 12.68 billion yuan ($1.9 billion; 1.6 billion euros; ￡1.5 billion), representing a year-on-year increase of 12.1 billion yuan, which exceeded its forecast from late July of a net profit in a range of 9 billion to 11 billion yuan, compared with 528 million yuan during the same period last year.

Revenue grew by 32 percent year-on-year to 975.9 billion yuan, due to higher prices and increased sales volume of crude oil, natural gas and refined products.

PetroChina said it expected competition in the oil and gas market to intensify in the second half, with global oil prices fluctuating "at a medium-low level with greater uncertainty" and more geopolitical risks faced by certain countries that have oil resources.

Wang Lu, an Asia-Pacific oil and gas analyst at Bloomberg Intelligence, says PetroChina is focusing on enhancing total shareholder return as evidenced by a special dividend on top of its 45 percent regular payout in the first half of this year.

"Revenue and profitability of PetroChina may continue to improve in the second half of this year on higher oil prices, though competition in the downstream may erode margins in the second half," she says.

The drastic profit rebound is based on last year's low base, which is also the company's worst first-half profit since it was publicly listed in 2000, she says.

Li Li, the energy research director at ICIS China, a consulting company that provides analysis of the energy market, agrees that PetroChina benefited largely from a rebound in international oil prices during the first six months.

On the other hand, another State-owned oil giant, China National Offshore Oil Corp, the country's largest offshore oil and natural gas developer, reported 16.3 billion yuan of net profit in the first half, compared with a loss of 7.7 billion yuan in the same period of last year.

CNOOC's revenue is also expected to continue rising in the second half of this year, yet improvements may be smaller as oil prices are unlikely to rise much from current levels, Wang says.

zhengxin@chinadaily.com.cn

(China Daily European Weekly 09/01/2017 page28)