China National Petroleum Corp (CNPC), the nation's largest oil conglomerate, yesterday announced it had made a record profit of over 110 billion yuan (US$13.3 billion) in 2004.

This represents a year-on-year rise of more than 50 percent, thanks to strong oil prices and robust domestic oil demand.

The company registered a revenue of over 560 billion yuan (US$67.5 billion) for 2004, a 15.7 percent increase year-on-year, CNPC President Chen Geng told reporters Thursday.

Chen attributed the company's stunning performance to China's continuous rapid economic growth in 2004, soaring international oil prices and the improved management of the company.

"The government's macro-economic controls and preferential market conditions resulted in substantial economic development in China in 2004, which fueled increasing demand for oil and gas," Chen said.

Last year, the company produced 111.76 million tons of crude oil, accounting for 64 percent of China's total crude production.

CNPC produced 28.7 billion cubic meters of natural gas, or 70 percent of the country's gas production, Chen added.

The aggregated sales volume of petrol, kerosene and diesel oil reached 66.81 million tons in 2004, up 10.4 percent year-on-year.

The company's annual investment in 2004 jumped 7.8 percent year-on-year, reaching 126.6 billion yuan (US$15.3 billion), mainly in its major business of oil and gas exploitation and production, oil refining and petrochemical production.

CNPC discovered 520 million tons of new proven oil reserves, and 243.6 billion cubic meters of proven natural gas reserves in 2004, according to the company.

CNPC's executives yesterday said the company is increasing its natural gas production and transportation capacity to satisfy growing gas demands in China.

Chen said his company is close to completing a second Shaanxi-Beijing gas pipeline.

The second line, which spans 900 kilometres from Yulin in Shaanxi Province to Beijing and neighbouring areas, will help greatly alleviate current gas supply shortfalls in Beijing and Shaanxi Province.

The current Shaanxi-Beijing transmission pipeline, the major source of gas for Beijing and Shaanxi Province, can hardly meet rising demands for gas this winter as more customers switched to gas for heating.

Once the second line is completed, this could increase daily supplies of natural gas to Beijing by 10 million cubic meters.

For CNPC, the natural gas business has proven highly profitable after the gigantic west-east gas pipeline project commenced commercial operations at the end of last month.

The west-east pipeline delivers 12 billion cubic meters of natural gas annually from the Tarim Basin in the Xinjiang Uygur Autonomous Region to Shanghai through a 4,000-kilometre pipeline.

As gas demand continues to surge, CNPC executives yesterday said they are considering the possibility of building a second west-east pipeline.

The company is now evaluating gas reserves in the Tarim Basin to study whether there are enough reserves to support additional gas supplies.

But the executives added that the current natural gas price is too low.

According to Jiang Jiemin, a senior vice-president of the company, the natural gas price is 35 percent lower than the current oil price in terms of the same heating value.

The low gas price will stimulate unnecessary consumption that, in turn, threatens the supplies, according to Jiang.

(China Daily January 14, 2005)