PetroChina hopes to meet 2022 throughput target despite H1 growth decline

PetroChina is aiming to achieve its 2022 crude throughput target despite a decline in H1 growth, as an anticipated upward trend in oil products consumption will give the state-run firm an opportunity to sharply lift runs in H2 and more than offset the deficit seen in early part of the year, company officials said Aug 25.

PetroChina's crude throughput in January-June declined 1.4% year on year to 597.5 million barrels, or 3.3 million b/d, meeting only 47.1% of its annual target for 2022, interim results showed. These suggests that PetroChina must lift its throughput by 10.6% from H1 to 3.65 million b/d in July-December to achieve the whole year throughput target of 1.27 billion barrels for 2022.

Huang Yongzhang, executive director and president, said the company expects China's apparent oil demand in H2 to stand at 180 million mt (7.78 million b/d) rising 1.6% year on year.

"We believe that China's economy will accelerate its recovery, along with domestic oil and gas demand improvement when the country's basket of measures to boost the economy takes effect," Huang said during the interim result call in and added PetroChina will benefit from China's good economic growth in H2.

China's GDP expanded 2.5% year on year in the first six months of 2022.

Analysts have lowered their 2022 GDP growth forecasts from 5.5% set by Beijing as Premier Li Keqiang said July 19 that the country would not employ large-scale stimulus measures to achieve economic growth targets this year, although it will maintain specific macroeconomic policies while adjusting the coronavirus policy.

Platts Analytics estimated China's economy to expand 3.3% this year, according to a report Aug. 15, lower than its previous forecast of 4.9% in March.

The company's refining utilization hit a 28-month low to below 67.8% in July due to maintenance in five refineries while the operating ones kept low crude runs.

However, the upcoming 400,000 b/d greenfield Guangdong Petrochemical refinery could help boost throughput slightly. Huang said construction of the integrated complex was close to completion and was inching closer to start operations.

Slow product demand growth

"We are seeing some structural changes to oil products demand from the previous years," Huang said, adding that PetroChina had trimmed its demand growth projections due to a changing energy landscape, such as the fast growth of electric vehicle registrations.

Registrations of China's EVs were at 10.01 million units in the January-June period, accounting for 3.23% of the country's total automobile registrations of 310 million units in the same period, data from the Ministry of Public Security showed. The share was up from 2.06% in the same period of 2021.

China Passenger Car Association data showed the country's EV sales soared 121.5% year on year to 2.73 million units in the first seven months of 2022, with the share of EV sales reaching 24.6% -- this was up from 16% in 2021 and 5% in 2020. Sales overwhelmingly exceeded a target Beijing had set for 2025 in its 15-year development plan for 2021-2035.

Oil, gas and new energy -- including solar, wind, hydrogen, and geothermal -- will each make up one third of its energy mix by 2035. By 2050, new energy will take about half of the company's total production capacity, Dai Houliang, company chairman, said during the call.

PetroChina's domestic gasoline sales dropped 12.1% year on year to 23.04 million mt, or 1.08 million b/d, in H1 due to widespread COVID-19 lockdowns in the second quarter and robust EV sales amid high fuel prices.

But gasoil sales gained 10.2% on the year to 24.48 million mt, or 1.01 million b/d, in the same period to compensate for the supply reduction of imported light cycle oil -- a blending material of gasoil.

Huang expected demand for jet fuel to improve significantly in H2, supported by aviation travel recovery.

Domestic sales of the fuel slumped 45.5% year on year to 2.82 million mt, or 123,000 b/d, in H1. The company slashed production by 40.8% to 3.76 million mt in the same period.

"Over the next 5 years, PetroChina expects demand for refined product will grow by 1.2% year on year. Gasoline and kerosene will grow while diesel will remain flat to down," research firm Bernstein said.

Rising upstream output

In the upstream sector, PetroChina raised its global oil and gas output by 3.1% year on year to 4.67 million b/d of oil equivalent in H1. The sector's profit from operations surged 167.1% on the year to Yuan 82.46 billion ($12.03 billion) in H1.

To respond Beijing's call of ensuring the country's energy supplies, PetroChina's domestic crude output gained 3.4% year on year to 2.14 million b/d to account for 51% of China's crude production.

The company spent Yuan 72.8 billion ($10.62 billion) in the exploration and production sector, accounting for 78.9% of its expenses in H1.

PetroChina has made proven and recoverable reserves of 83.7 million mt (618.46 million barrels) oil and more than 25 Bcm natural gas in H1, Huang said.

The company estimated its annual proven recoverable reserve crude oil to exceed 100 million mt and 30 Bcm natural gas in 2022.

Moreover, PetroChina added 49.5 million mt of proven and developed crude reserves and 25 Bcm of gas reserves, Huang said.

PetroChina operation results:

* Oil, gas outputs from both domestic and overseas

Source: company report

PetroChina domestic production:

(Unit: mil mt)

^ Divide PetroChina's output by China's total production

Source: company report, National Bureau of Statistics

PetroChina total oil product sales volume*

(Unit: mil mt)

* Both in domestic and overseas

Source: company report