Industry sees prices under pressure amid continued uncertain economy

Leading oil and natural gas companies PetroChina Co Ltdand CNOOC Ltd reported first-half results on Thursday thatreflected weaker demand for refined products.

CNOOC, the largest domestic offshore oil and gas producer,recorded a 2.3 percent year-on-year decline in first-half netprofit to 33.6 billion yuan ($5.47 billion).

Commenting on the profit drop, Chief Financial Officer ZhongHua said increased selling prices had failed to offset higherproduction costs.

The company's average oil price was $106.30 a barrel in thefirst half, up 2 percent, while the average gas price rose 13.5percent year-on-year to $6.44 per 1,000 cubic feet.

The operating cost was $11.78 per barrel of oil equivalent,up 7 percent, mainly attributable to the consolidation of twomore months of Canada-based Nexen Inc's performance,according to the report.

The company's all-in cost was $43.20 per BOE, up 2 percent year-on-year.

CNOOC closed its $15.1 billion acquisition of oil and gas producer Nexen in February 2013, adeal intended to raise the parent's annual output by 20 percent and proven reserves by 30percent.

Chief Executive Officer Li Fanrong said the company will continue to improve its asset structure.

Separately, PetroChina, the country's largest oil and gas explorer, reported net profit growth of 4percent to 68 billion yuan.

Helped by the central government's gas pricing reform, PetroChina's gas and pipeline segmentachieved first-half operating profit of 4 billion yuan.

Excluding year-earlier gains from divestment of pipeline assets and operations, the segment'soperating profit was up 7 billion yuan.

Crude output edged up 0.2 percent to 500 million barrels and oil product output increased 1.9percent to about 46 million metric tons.

The refining and chemical segment remained in the red with an operating loss of 3.4 billion yuan,but that represented a narrowing of the division's loss by 12.4 billion yuan from a year earlier.

Crude oil output from overseas operations totaled 56.2 million barrels, and marketable naturalgas output reached 65 billion cubic feet.

The oil and natural gas equivalent output was 67.1 million barrels, on par with the year-earliervolume, the company said.

The company said that prospects for the mild recovery of the global economy will remain highlyuncertain in the second half and global oil prices will face downward pressure.