PetroChina Reported $162 Billion Liability As Oil Price Continues to Plunge
China's oil giant reported a drop of profit by 67%, the worst in 15 years. Oil prices weighed down its performance and finished in landing $162 billion liability.
PetroChina is the subsidiary of China National Petroleum Corporation (CNPC), the second second-biggest Chinese crude oil producer by consolidated revenue, and the biggest by production volume. CNPC also listed as the fourth largest company in the world in term of revenue. PetroChina, established in 1999 is the operator of most CNPC oil operation.
China Daily reported that among all non-financial A-share companies, PetroChina topped the list with 1.05 trillion yuan ($162.8 billion) liability. The state-owned company has been weighing down by the nosediving oil price. The liability brought down its debt ratio to 43.8% from last year's 45.2% as its profit plummeted 67% to 35.5 billion yuan ($5.49 billion).
China's oil companies have reported weak performance due to the continuous plunge of oil price. Along with PetroChina, Sinopec also reported a 32.1% of net profit slump to 32.2 billion yuan ($4.9 billion).
They desperately need liquidity as oil price continued to drop more close to 50% last year. CNBC reported that China's financial regulator in December has approved the company to issue corporate bond no more 40 billion yuan ($6.19 billion) value.
Meanwhile, the stability of oil price is still uncertain, despite the meeting between oil producers will be held this month in Doha, Qatar to discuss oil cap production in order to stabilize the price. Saudi Arabia, as the biggest producer in OPEC, has warned the country to agree to freeze the production if other countries, such as Iran, also cut its production. Meanwhile, Iran needs to boost its production to recover its economy after economic sanctions had been lifted.
The second biggest producer, Iraq, has also increased its production by 2% and boost export by 18% last month. A partner at New York hedge fund energy, Again Capital LLC, John Kilduff, told Bloomberg that speculations ahead of the meeting have triggered buying which lifted Brent futures 2.1%.
"There's a lot of excitement about the Sunday meeting," John Kilduff said. "Speculation that an agreement will be reached is generating some buying. There should be considerable short covering before the meeting."
Oil price was traded higher at 33% volume above the 100-day average due to the buying spree ahead of the meeting. In the ICE Futures Europe exchange, Brent scheduled for June shipment rose 89 cents to close at $42.83 a barrel, the highest since Dec 4.
Meanwhile, Western Texas Intemediate advanced 1.6% in New York Mercantile Exchange. WTI was closing at $40.36 a barrel, the highest since Feb 12.
PetroChia, the China's oil giant reported a 67% drop in profit. The company reported its worst profit in 15 years which bring liability of $162 billion as its profit plunged 67% to 35.5 billion yuan ($5.49 billion). Furthermore, speculation ahead of Doha meeting has triggered buying in oil futures.