PetroChina, Sinopec slump to big 1Q losses

China's two largest oil companies state-controlled PetroChina and Sinopec slumped to big losses in the first quarter as the impact of the Covid-19 outbreak hit their domestic refining operations.

PetroChina reported a loss of 16.23bn yuan ($2.3bn) in the period from a profit of Yn10.25bn a year earlier, blaming the coronavirus and a "significant increase in instability and uncertainty".

Global oil and refined product supplies exceeded demand in the period, PetroChina said. But the company nevertheless boosted its upstream output by 6.1pc from a year earlier to 4.55mn b/d of oil equivalent (boe/d), in line with a rise in capital expenditure and new capacity. Crude output was up by 4.2pc to 2.56mn b/d.

Chinese state-controlled producers are under political pressure to raise output to help ease the country's reliance on imports. This helped drive a 6pc increase in PetroChina's domestic production to 3.93mn boe/d. But overseas output also rose, up by 7pc to 619,000 boe/d.

PetroChina scaled back its refinery output amid widespread shutdowns of the Chinese economy in the quarter because of the coronavirus outbreak. Its crude throughputs fell by 9.6pc to 3.04mn b/d, while output of gasoline, diesel and kerosine was down by 13.8pc to 25.2mn t. The company's refining and chemicals segment fell to a loss of Yn8.7bn from a profit of Yn3.1bn a year earlier.

PetroChina expects the global oil market to remain oversupplied and prices to stay low this year. It is taking "active measures" to deal with the risk of crude price fluctuations, it said, without giving details.

Refining-focused Sinopec made a loss of Yn19.78bn in the quarter after a profit of Yn14.76bn a year earlier. Its refinery segment was hard hit, making an operating loss of Yn25.8bn.

Sinopec, China's largest refiner by capacity, cut throughputs by 13pc to around 4.3mn b/d in the quarter. Its fuel output — gasoline, diesel and kerosine — was down by 16.3pc to 33mn t. Upstream production held steady, dropping by just 1pc to 1.23mn boe/d.

By Kevin Foster