PetroChina starts year off with a bang

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PetroChina Co, the listed unit of the nation's biggest energy company, posted a "very good" performance in the first two months of this year, said Chairman Jiang Jiemin.

The oil and gas producer will increase capital spending in 2011, Jiang said in an interview in Beijing on Monday, without giving details, or a reason for the company's performance. Exploration and production accounted for 83 percent of PetroChina's operating income in the first half last year.

"I think he's referring to strong oil and gas production growth in the first two months," said Neil Beveridge, an analyst at Sanford C. Bern-stein & Co in Hong Kong. "The company will also have benefitted from higher crude prices."

PetroChina's domestic gas output rose 10 percent in the first two months from a year earlier, according to Beveridge. The company's oil production in China may have increased 5 percent, he said.

Crude in New York gained almost 6 percent over January-to-February to $96.97 a barrel because of anti-government protests in North Africa.

The unit of State-controlled China National Petroleum Corp lost money in its refining operations because of the increase in global crude prices following the unrest in Libya, Jiang said, without elaborating.

Shares of PetroChina fell 0.7 percent to HK$10.70 ($1.37) in Hong Kong trading, compared with the 0.3 percent decline in the benchmark Hang Seng Index.

China is due to raise the trigger level of the oil windfall tax this year, Jiang said, citing a government plan. The adjustment will be made when the government introduces a nationwide resources tax, he said.

Chinese oil producers have been paying a tax on revenue from crude sold above $40 a barrel under a levy introduced in March 2006.

Crude in New York was trading at $99.44 a barrel in electronic trading at 10:54 am Singapore time.

PetroChina isn't considering buying any of BP Plc's refineries, Jiang said. BP said in February it will sell half its refining capacity in the United States.

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