Business

China Petroleum & Chemical Corp., Asia’s biggest oil refiner, said yesterday that it had asked the government to exempt taxes levied on the imports of crude oil and fuel to help boost profits.

If the exemptions were approved by the government, the changes would be reflected in the next-quarter report, financial officer Dai Houliang said.

The Beijing-based oil company was paid state subsidies of 45.1 billion yuan (US$6.59 billion) for selling fuel at below crude oil costs for the first nine months, according to Bloomberg News. Its net profit fell 67 percent for the period because government caps on fuel prices prevented it from passing on higher crude oil to consumers, said Sinopec, as China Petroleum is known.

The refiner’s crude oil costs were about US$113 a barrel in the three months ended September 30, Dai said. The Chinese government paid Sinopec and its bigger rival PetroChina Co rebates of 75 percent on the 17-percent value-added tax levied on crude imports in the second quarter. The amount of subsidy Sinopec received in the third quarter for crude imports was less than that for the previous three months, Dai said in August.

Sinopec would cut its 2008 capital expenditure by 8.2 billion yuan due to “severe operating pressure” and “cash flow constraints,” Chairman Su Shulin said on August 26.

The company would stick to its plan to cut spending and would not change its fourth-quarter expenditure budget, Dai said yesterday.

Dai said the company’s refining business “has already reversed from losses based on current crude oil and domestic fuel prices.” China’s 2009 petrochemical demand growth would be lower than the previous years as the economy slowed, Dai said.

China raised the prices of gasoline, diesel and jet fuel by at least 17 percent in June. Sinopec hadn’t received notice of further price changes from the government, according to Dai.

(Shanghai Daily October 31, 2008)

China’s first cross-provincial coalbed methane pipeline has been approved by the National Development and Reform Commission (NDRC), said China United Coalbed Methane Corp. on Thursday.

The project, with a total investment of 458 million yuan (US$67.4 million), would channel coalbed methane from the Qinshui basin of Shanxi Province in north China to Henan Province in central China for use in homes and chemical factories.

There is no clear timetable, but the company said the construction would begin very soon and is scheduled to be completed by the end of 2009, sources with the company said.

The designed gas transport capacity of the pipeline is 1 billion cubic meters per year. China United Coalbed Methane Corp. would supply for the coalbed methane.

The 98.2-km pipeline would promote the development of coalbed methane in the Qinshui basin and help boost gas supply in areas along the channel, the NDRC said in a statement to the company.

(Xinhua News Agency October 30, 2008)

China will host an international mining congress in Beijing this November, creating an information exchange platform for both domestic and overseas mining industries, according to a press conference today.

The China Mining Congress & Expo 2008, one of the world’s top four mining events and the biggest Asian platform for mining exploration, will be held at the Beijing International Convention Center from November 11 to 13, told the conference.

Hosted by the Ministry of Land and Resources and supported by the World Bank Group, China Mining Association, and the Australian Canadian embassies, the congress is approaching its 10th anniversary.

High-level speakers from both Chinese and foreign mining industries will attend the congress and discuss new developments, investment policies and programs in the Chinese mining industry.

Various topics will be discussed, including mining investment and financing, new technology and equipment, mining and sustainable development, mining commodities, and mining valuation and service.

The conference will also increase networking opportunities to address business issues that are relevant for the participants.

This year’s exhibition will include the Countries Pavilions, the Chinese Government Area, and an Equipment Exhibition Area, as well as most sections in the mining industry.

On the occasion of the 10th anniversary of the China Mining Congress, the organizing committee will promote several events, including nominations for the China Mining Awards.

China Mining Awards are being presented in five different categories. They recognize and promote innovation and co-operation achievements in China. Focusing on exceptional success stories in exploration, mining, technical innovation and sustainable behavior, they reward industrial leaders in terms of business strategies.

More than 3,000 registered delegates, including government officials, mining industry insiders and researchers, are expected to participate in the event, said the press brief today.

For more information about China Mining Congress & Expo 2008, please visit the website: www.mining-expo.com/en or www.china-mining.com

(China Daily October 30, 2008)

The last generator of China’s Three Gorges Dam on the Yangtze River went online yesterday, meaning that the world’s largest hydropower plant has become fully operational.

Launched in 1993, the project’s original plan called for the 26 generators to produce 84.7 billion kWh of electricity annually after its completion.

This was later expanded to include six more turbines installed underground by 2012 to reach a capacity of 22,500 MW.

The project, operated by China Three Gorges Project Corporation (CTGPC) at a total cost of 180 billion yuan, now provides a total installed capacity of 18,200 MW with 26 generators, each with an installed capacity of 700 MW.

The electricity generated by the project fuels 15 provinces in central, eastern and southern China, easing power shortages in industrial regions.

China is increasingly turning to hydropower as a clean, alternative solution to its growing energy demand.

Hydropower is expected to account for 28 percent of the country’s total power generation by 2015, up from the current 20 percent, according to the National Development and Reform Commission.

“The Three Gorges Project indicates how far China has progressed in renewable energy, being the leader in the hydroelectric field in terms of unit design, manufacturing, installation and operation,” said Lin Chuxue, vice-president of CTGPC.

China now has a total installed hydropower capacity of 145 million kW.

(China Daily October 30, 2008)

China’s renewable energy use accounts for 8.3 percent of total fuel consumption, said a government official yesterday.

Demand for energy from renewable sources reached 220 million tons of coal equivalent last year, Xie Zhenhua, vice chairman of the National Development and Reform Commission, said in Beijing.

(Shanghai Daily October 30, 2008)

Top Asian refiner Sinopec Corp. yesterday said it posted a 39.1-percent drop in third-quarter earnings as higher crude prices hurt its refining business, but analysts were upbeat on its outlook with crude rates falling.

Beijing-based Sinopec earned 8.17 billion yuan (US$1.2 billion), against 13.4 billion yuan a year earlier, under international accounting rules, the company reported.

The benchmark New York crude futures averaged 57 percent higher in the third quarter from a year earlier, eating into Sinopec’s margins despite a government move to raise gasoline and diesel prices by up to 18 percent in June.

Still, Sinopec’s third-quarter profit is about four times that of the second quarter as refining losses narrowed, and falling crude prices are making Sinopec increasingly attractive.

New York crude have more than halved to about US$65 a barrel recently from July’s record high amid concern global economic slowdown would cut demand.

Sinopec said it got 11.7 billion yuan in state subsidies due to its refining losses in the third quarter.

“Narrowing refining loss means Sinopec could have a brighter fourth quarter,” said Qiu Xiaofeng, an analyst at China Merchants Securities. But he also pointed out China may again lower fuel prices if crude could stay below US$80 over a longer period.

Sinopec’s January-September crude output rose 2.1 percent to 31.33 million tons, and the processing volume swelled 7.3 percent to 128.77 million tons. One ton of crude equals to about 7.3 barrels.

Its capital expenditure in the first nine months was 58.8 billion yuan. Sinopec in August said it will cut capital spending by 8.2 billion yuan to ease cash-flow constraints and operations due to the refining loss.

Rival PetroChina Co., the nation’s top crude oil producer which has a smaller refining exposure than Sinopec, yesterday said earnings rose 29.9 percent to 39.9 billion yuan in the past quarter on higher crude prices and output. In the first nine months, PetroChina produced 653 million barrels of crude and 1.37 trillion cubic feet of natural gas, up 2.8 percent and 16.3 percent respectively.

(Shanghai Daily October 30, 2008)

China Oilfield Services Ltd. (COSL) announced Wednesday its net profit rose 61.7 percent year-on-year in the first three quarters of the year.

Its net profit in the first three quarters was 2.75 billion yuan (US$402.64 million), said the company in its quarterly report.

Earning per share was 0.61 yuan, up 45.2 percent over the same period last year.

Business income in the first nine months hit 8.19 billion yuan, representing an increase of 23.1 percent over the same period last year.

Yuan Guangyu, CEO and president of the company, said COSL maintained a sound development this year with successful acquisition of Norway’s Awilco Offshore ASA (AWO) and the application of new technology

COSL announced in September it had completed acquisition of AWO for 17.1 billion yuan. After the acquisition, the AWO was merged into COSL Norweigian AS, a wholly-owned subsidiary of COSL.

Yuan said COSL will prudently but actively seek more development opportunities worldwide and explore new markets and businesses.

COSL is the listed arm of the China National Offshore Oil Corp. (CNOOC Group), the country’s biggest offshore oil producer.

(Xinhua News Agency October 30, 2008)

China National Offshore Oil Company Limited (CNOOC Ltd.) announced Tuesday that it’s net oil and gas output in the third quarter of 2008 rose by 15.2 percent over the same period last year.

The state-owned offshore oil producer said that its unaudited total revenue was 30.9 billion yuan (US$4.5 billon) for the third quarter, representing a year-on-year increase of 69.1 percent.

The company’s unaudited oil and gas revenue for the third quarter reached 30.5 billion yuan, up 67.9 percent from a year ago. For the first three quarters, the company’s unaudited total oil and gas revenue hit 84.95 billion yuan with a year-on-year increase of 65.3 percent.

Soaring oil price in the first three quarters and rising oil and gas output contributed a lot to the revenue rise of the big oil producer.

According to CNOOC Ltd., the company achieved a total net daily oil and gas production of 549,589 barrels of oil equivalent (BOE) in the third quarter, including 480,857 BOE per day in offshore China and 68,732 BOE per day overseas.

The company’s realized crude price for the third quarter increased by 58.7 percent to US$106.94 per barrel. Its realized gas price was US$3.83per thousand cubic feet, a year-on-year growth of 11.7 percent.

CNOOC Ltd. said it found four new oil and gas fields in the third quarter with two new projects starting production and seven appraisal wells were made.

For the third quarter, the capital expenditure of the company rose by 44.9 percent to 10.19 billion yuan, according to the company.

CNOOC Ltd. is the major listed subsidiary of China National Offshore Oil Corporation (CNOOC), China’s largest offshore oil producer.

(Xinhua News Agency October 29, 2008)

China’s coal output slowed down in September after power consumption weakened for five months in a row on economic downturn, the Beijing News reported on Tuesday citing sources with China Coal Transportation and Sales Society(CCTS).

The output of raw coal dropped to 229 million tonnes in September from August’s 232 million tonnes, figures from the State Administration of Work Safety show.

Up to 1.99 billion tonnes of coal were churned out in the first nine months, up 11.43 percent from a year ago. The output growth rate was down from 11.46 percent for the year ending August, according to the data provided by Coalworld.net.

Analyst with CCTS Li Chaolin said the closure of small-sized coal pits contributed to the shrinking yields. And the economic slowdown and the enterprise’s moves to save energy were also factors behind the oversupply.

Thermal power consumption declined by 3.4 percent to five-month low in September. Electricity used by the textile industry, hard-hit by the ailing exports, was only 1.9 percent more than the same period last year. By contrast, the power consumption growth rate advanced 11.20 percent in January-November of last year from a year ago, according to Wind Financial Data.

Power coal output, which took up 40 percent of the total, declined 7.64 million tonnes, or 12 percent in September from a month ago. As a result, overstock has plagued the northern Qinhuangdao Port, China’s largest port for coal shipment as coal inventory broke the 8.9 million tonnes mark on Sept 21.

Vice chairman of China National Coal Association Pu Hong predicted the coal stock in the port would keep above 8 million tonnes in the short term.

China’s GDP slowed to 9 percent in the third quarter as the spreading credit crisis sapped foreign demand for Chinese goods. GDP for the first three quarters slowed to 9.9 percent, the first single-digit expansion since 2002.

(Xinhua News Agency October 28, 2008)

Chinese land and resources authorities in the eastern Shandong Province on Monday announced the discovery of two new gold and iron ore deposits.

Geologists with Shandong Provincial Bureau of Geology and Mineral Resources found a gold ore deposit with a proven reserve of 103 tonnes at the southern section of the Jiaojia gold belt in Laizhou City, said the announcement.

The deposits were estimated to have an economic value of more than 20 billion yuan (US$2.92 billion).

The Jiaojia belt, at the northern edge of the Shandong Peninsula, has become a focus for exploration since China first found gold ore deposits there in the 1970s.

Geologists also found another gold ore deposit with a potential of 51.83 tonnes near Sizhuang of Laizhou. More than 100 tons of gold ores have been produced from this metallogenic belt so far.

The bureau also announced a proven deposit of more than 1 billion tonnes of iron ore in Yanzhou, a small city in Jining, in southern Shandong, said the announcement.

The deposit, which is 80.46 meters to 190 meters thick with a concentration ratio of 25.97 percent to 31.72 percent, is buried about 1,020 to 2,200 meters below ground, said an official from the bureau.

Before this, the proven iron ore resources in Shandong stood at 2.6 billion tons.

The newly discovered deposit, though with its grade remains moderate, will provide Shandong with an important resource guarantee for the iron and steel making industry, said the official.

(Xinhua News Agency October 27, 2008)