PetroChina’s gas business profits from pipeline assets sale, but challenges remain

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On 25 March, PetroChina released its full-year financial results for 2020. Its natural gas and pipeline business segment generated RMB72.4 billion (US$10.5 billion) of operating profit in 2020, up 177% from 2019. The huge increase was thanks to the one-off profit realisations associated with its transfer of pipeline assets to PipeChina. However, the underlying performance of the gas business remains fragile. Profits on sales of domestic gas and city gas business both plunged. Sales of imported gas continued to bleed. Looking ahead, natural gas will remain one of PetroChina’s priorities in its shift to lower carbon emissions. But increasing its gas business profits will be challenging. Although Q1 2021 results showed 63% year-on-year growth of operating profits in its gas business, the profitability is not sustainable and expected to shrink in the coming quarters. The company is changing its gas sales pricing methods again in 2021, which may provide some albeit limited relief.

Table of contents

    • Domestic production volume increased, but profits were down
    • Losses on gas imports were narrowed as a result of oil price crash
    • Pipeline restructuring led to one-off profit surge, but the leading cash-generative business is gone
    • Natural gas will be a priority as the company joins China’s long-term climate ambitions
    • Near-term task remains to improve the viability of its gas business

Tables and charts

This report includes 4 images and tables including:

  • Operating profit of natural gas and pipeline business
  • Unit loss of imported gas
  • Delivered costs to Shenyang, northeast China in 2020
  • PetroChina’s low-carbon transition path

What's included

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    PetroChina’s gas business profits from pipeline assets sale, but challenges remain

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