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Quick facts: Petrochina vs. SNP and CEO

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oil_barrel1(Sept. 26, 2009) To put the latest developments of the Chinese oil induistry and its three main players into a perspective, this article will compare Petrochina (NYSE:PTR) with Sinopec (NYSE:SNP) and CNOOC Ltd (NYSE:CEO).

Background: Petrochina (NYSE:PTR) is the largest Chinese oil producer with significant oil refining capacity. China Petroleum & Chemical Corp. known as Sinopec (NYSE:SNP) is the largest refiner in Asia with some oil production. CNOOC Ltd. (NYSE:CEO) is China's off-shire oil specialist.

To better understand how Petrochina (PTR) bodes compared to the industry, a comparison between Petrochina's oil exploration and production segment to the production of CNOOC ltd (NYSE:CEO) makes perfect sense. Then  a second comparison between Sinopec's and Retrochina's refining activity will shed light in regards to which company has a more efficient and a better run refining operation.


The first comparison is between the oil production & exploration segment of Petrochina (PTR) vs. CNOOC Ltd. (CEO) .


During the first half of 2009, crude oil production of Petrochina (NYSE:PTR) was 417.7 million barrels, representing a decrease of 4.8% when compared to the same period last year. The reason for this decrease in production was mainly because of the mature oil fields. The company made several efforts to increase production to keep up with the demand. PTR undertook sophisticated methods to make secondary recovery in the mature oil fields, developed production capacity of new oil fields Changqing, Tarim and Jilin and made significant progress in the oil and gas exploration in different places. It has also entered into a number of cross-border co-operation projects to boost its production and reserves. However for keeping up with the demand and long-term growth, PTR has to find up and running of new sources to pump oil.

On the other hand, CNOOC’s net oil and gas production reached 105.8 million barrels-of-oil-equivalent (BOE), representing an increase of 15.2% year over year. This growth was attributable to different major production projects put into place last year. These projects helped CNOOC (NYSE:CEO) to increase production steadily during the first half of 2009. Further, the OML130 project, which started production early this year, almost doubled CNOOC’s overseas crude oil production. By applying effective production-methods and maintenance procedures, CNOOC (CEO)  has able to maintain stable production from its mature oil fields. It also has put production projects in place to cater to the demand and long-term growth.

The second comparison is between the refining segment of Petrochina (PTR) vs. China Petroleum & Chemical Co. (NYSE:SNP) .


During the first half of 2009, PTR processed 389 million barrels of crude oil representing a decrease of 8.4% compared with the same period last year, while SNP processed 86.90 million tonnes of crude oil representing an increase of 1.8% increase compared with the same period last year. PTR produced 34.55 million tonnes of gasoline, diesel and kerosene, representing a decrease of 6.1% compared with the same period last year, while SNP’s oil products production amounted to 54.04 million tonnes, representing an increase of 3.5% compared with the same period last year.

Overall, both the companies PTR and SNP had low level of refining activity during the first half of 2009. This was due to low level of sales caused by the economic slowdown in China. However, both the companies optimised their production processes to adjust product mix, adapting to the changes in the products market and demands for chemical stocks. SNP was slightly better than PTR in the chemical product segment. This was mainly due to PTR’s huge inventory on hand. PTR made large adjustments to the load capacity of processing facilities and optimized overall use of resources in order to adjust for the huge inventory on hand from last period.

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