The company, PetroChina, has been going through a difficult time recently. The company has seen its profits decrease as well as its exploration and production volume.
This drastic change is a result of the economic slowdown in China. This company has gone from earning $8.8 billion in 2016 to less than $1 billion in 2017 which is one of the lowest ever for this company.
PetroChina is the second-largest oil and gas company in China and it was first listed on the Hong Kong Stock Exchange (SEHK: 0057) in 2007. The company had risen to prominence with its success on new shale gas discovery and exploitation.
China had seen an increase of 31% on new shale gas exploitation which made it the fastest-growing shale gas producer in the world. The company had been experiencing a lot of success on this front but since 2015, it has seen a sharp decline of more than 80%.
There was an increase in production following the discovery of shale gas but there is still a need for investment and time before they can see even greater results. Currently, China’s economy has been slowing down which has had a negative impact on the company. In the early days, the company was able to recover from slowdowns in demand but not this time around.
According to S&P Global Market Intelligence, China’s natural gas production dropped by 5% while liquefied petroleum gas production fell by 13%. The decrease in exploration and production has led to a slump in revenues and this is worrying for the company.
It has been observed that the revenue did not cover expenditure and this has put immense pressure on operations. The company was also affected by an increase in borrowing costs which were brought about by credit downgrades.
Even though PetroChina has seen a decline, it is expected that there will be a rebound in 2018. The company was ranked at number 251 in the Fortune Global 500 list of 2017 based on its $183.3 billion market cap and this is expected to rise when it is listed.
The development of the shale industry has led to an increase in production in China which has had a negative impact on PetroChina because of the increased competition.
Additionally, China’s economy has seen a slowdown in recent years which has affected the company because it could not recover from this like in the past.
Exploration and production have also declined which has led to decreased revenues for PetroChina. However, things are expected to change next year when they are listed on the Hong Kong Stock Exchange.
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