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PetroChina to cut 2015 crude output by 1.5 per cent to 1.6 per cent - source

Tuesday, March 31, 2015 - 18:58

[BEIJING] China's state-owned PetroChina plans to cut 2015 crude output by 1.5 per cent to 1.6 per cent from last year, prompted by low oil prices, a person with direct knowledge of the matter said on Tuesday.

The source, who asked not to be named because of the sensitivity of the subject, also said production of natural gas was expected to rise 6 per cent.

Chinese state-owned energy companies do not usually comment on operating figures.

Crude output by PetroChina, Asia's largest oil producer, reached 945.5 million barrels in 2014, an increase of 1.4 per cent from the previous year.

With oil prices down more than half since June 2014 as soaring output has clashed with slowing global demand, producers have faced pressure to prop up prices by cutting output.

China is the world's fourth largest producer of crude oil, and a net importer. Roughly 90 per cent of PetroChina's output is domestic.

State-owned Sinopec, PetroChina's main domestic rival, has forecast a 3.5 per cent reduction in its domestic crude output this year, from 311 million barrels in 2014 to 300 million barrels.

Lower production has already hit PetroChina's ageing Daqing field, China's largest, which is expected to cut production by 1.5 million tonnes (10.95 million barrels) in 2015 in response to low prices and depleting reserves.

"It's nothing out of the ordinary," said Simon Powell, head of Asia oil and gas research at CLSA in Hong Kong. "Remember that other companies around the world are equally trimming. And this is why the oil markets will come back into balance."

Mr Powell added that PetroChina could cut production without damaging the wells, by cutting back on the in-field drilling it has used for years. "All they do is they just don't do as much in-field drilling, and allow the underlying decline rates in Daqing to just reveal themselves," he said.

REUTERS