China oil majors spill red ink in blow to economic revival plan

BEIJING — Leading Chinese state-owned energy groups PetroChina and Sinopce reported net losses for the first quarter through March, hurt by falling oil prices and the loss of demand from the coronavirus pandemic.

The losses, reported Wednesday by the two companies’ Hong Kong-listed arms, eclipse profits earned a year earlier.

Fellow energy giant China National Offshore Oil Corp., or CNOOC, said the same day it managed to stay profitable, but it will cut capital expenditures due to diminished revenues.

These setbacks come as the Chinese government enlists state-owned enterprises to pull the world’s second-largest economy out of its slump. All three companies will instead prioritize reviving earnings by scaling down investments and cutting costs.

Oil producer PetroChina posted a first quarter net loss of 16.2 billion yuan ($2.3 billion), compared with a 10.2 billion yuan profit from a year earlier.

Revenue slipped 14% to 509 billion yuan. Though the company boosted output of crude oil and natural gas by 6%, its sale price dropped 9% for petroleum and 23% for natural gas.

Sinopec reported a 19.1 billion yuan loss, wiping out the 15.4 billion yuan profit from the year-earlier quarter.

The company, whose main business is refining, was squeezed by the lack of demand for gasoline and petrochemical products. Its volume of crude oil processed sank 13%. Revenue plunged 23% to 555 billion yuan due to declining prices.

CNOOC did not disclose its full quarterly results, but Chief Financial Officer Xie Weizhi said during an earnings call Wednesday that the company did not suffer a loss. The offshore oil driller boosted crude and natural gas production 10% on the year, but oil and gas revenues shrank 6%.

CNOOC has reduced its annual output target by 3% and will slash total capital expenditures by roughly 10%, the company said through its Hong Kong-listed unit. The adjustments will mostly target U.S. shale oil projects, where production costs are higher than in China.

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