20 March 2014, News Wires – PetroChina Co Ltd flagged on Thursday a drop in capital expenditure for 2014, its second consecutive annual decline since it became a listed company, as the state-run oil giant tries to reassure investors following a massive corruption scandal.
Capital spending is expected to fall 7 percent year-on-year this year to 296.5 billion yuan ($47.85 billion), the company said in its annual earnings statement.
In 2013, capital spending fell 9.6 percent year-on-year to 318.7 billion yuan, it added, the first such fall since its debut on the Hong Kong and New York stock exchanges in 2000.
“In 2013, the group accentuated the principles of quality and profitability, focused on return on investments and reasonably adjusted the pace of project construction,” PetroChina said after posting a 21 percent rise in fourth quarter net profit.
PetroChina has vowed to divest more non-core assets such as pipelines and marginal oil and gas fields to reinforce investment in large upstream projects with the aim of boosting shareholder returns.
PetroChina and its parent firm, China National Petroleum Corp (CNPC), are at the centre of one of the biggest corruption investigations into the Chinese state sector in years, launched by the government half a year ago.
The probe, part of a nationwide anti-corruption campaign led by Chinese President Xi Jinping, is still expanding and there are no signs it will end soon. Five former top executives from both companies are being investigated for “serious discipline violations”, shorthand generally used to describe graft.
“The management seems to be saying the right things and giving the right messages to people. But the market is not going to pay too much attention to words until its clear the government has stopped investigating,” James Hubbard, Hong Kong-based head of Asia oil and gas research at investment bank Macquarie, said before the earnings were announced.