PetroChina says 1H net profit fell 35 pct

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PetroChina says 1H net profit down 35 percent as refining losses offset oil price gains
SHANGHAI, China (AP) -- PetroChina's first-half net profit fell 34.5 percent, the oil company said Wednesday, amid rising losses in its refining business mainly due to Chinese domestic price controls.

The company earned 53.6 billion yuan ($7.8 billion) in the January-June period compared with 81.8 billion yuan in profit a year earlier.
Unlike other global oil giants that are reporting record profits thanks to surging prices, price controls on fuel and other oil products prevent PetroChina and other domestic refiners from passing on higher costs for imported crude oil to consumers, forcing the state-owned refiners to bear heavy losses.

The company's earnings were in line with analysts' forecasts.
Beijing-based PetroChina, whose parent company is state-owned China National Petroleum Corp., said the loss for its refining and marketing business surged to 59 billion yuan ($8.6 billion) in the first half of the year, compared with a 3.9 billion profit in the same period in 2007.
Operating expenses jumped 64 percent to 510.7 billion yuan ($74.7 billion), mainly due to higher costs for crude oil, feedstock oil and refined products, it said.

Chronic shortages of diesel and gasoline in the past year have prompted authorities to raise fuel prices twice to help reduce the gap between international crude oil prices and domestic prices. Meanwhile, refiners like PetroChina and Sinopec, which reported a 77 percent plunge in its net profit in the January-June period, have absorbed billions of dollars in government subsidies.
The worst is yet to come, Sinopec's chairman Su Shulin told reporters in Hong Kong on Tuesday.
"I have to say that while this is the worst year ever for China's petrochemical sector, the worst is still not yet past," the Shanghai Securities News quoted Su as saying. --> Remember that his statement will turn once oil goes up again.

Average prices for gasoline and diesel in the domestic market in the first six months of the year were 32 percent and 42 percent lower, respectively, than international prices as quoted on the Singapore market, PetroChina said.

Analysts say they expect the government to raise fuel prices again soon, following increases of up to 18 percent in June.

PetroChina was valued, according to some calculations, at over $1 trillion following its mammoth share offering in Shanghai last October, making it the world's most expensive company by market capitalization, though not the most profitable.
But its share price has since sunk from its trading debut peak last autumn of nearly 44 yuan to Wednesday's close of 13.06 yuan, down 2.3 percent.