PetroChina surpasses Exxon, is now world’s biggest

▪ PetroChina surpasses Exxon, is now world’s biggest

PetroChina has surpassed Exxon Mobil, becoming the world's biggest publicly traded producer of oil. The company announced on March 29th that it pumped 2.4 million barrels a day last year, surpassing Exxon by 100,000. Production increased 3.3 percent in 2011. The company posted a 26 percent drop in Q4 net earnings, down to RMB29.55 billion (US$4.69 billion), as rising refining losses offset gains from its upstream business. Upstream exploration and production posted an operating profit of RMB219.5 billion in 2011 (up 42.8%) while its refining business posted an operating loss of RMB60.1 billion. PetroChina was created by the Chinese government to secure more oil for that nation's booming economy. The company has grown rapidly over the last decade by squeezing more from China's aging oil fields and outspending Western companies to acquire more petroleum reserves in places like Canada, Iraq and Qatar.

▪ Chinese car market tops 20 million

For the first time, the car market for a single country – China – will top 20 million vehicles annually. The milestone should be set in 2012, said Kevin Wale, the boss of General Motors China, during the Detroit motor show. By comparison, the U.S. market this year is expected to be a shade under 13 million. There’s still plenty of room for the Chinese market to grow, as figures from the China Association of Automobile Manufacturers show only 60 vehicles per 1,000 people. That’s less than half the world average and less than a tenth the number in the U.S. The effect of this is already being felt, as car makers design vehicles specifically for the Chinese market. For their part, Chinese consumers are said to increasingly favor high quality-vehicles with better safety standards.

▪ Saudi Aramco invests in refineries in China and Indonesia

Saudi Aramco, a state-run oil company, plans to invest US$90 billion over the next five years to build and expand refineries, many of them in China and Indonesia. Refining capacity will be increased by 50 percent, to six million barrels a day. While some of the increase will come from upgrades to existing refineries in Saudi Arabia itself, some will come from new refineries, such as the one in southern Yunnan province being negotiated between Saudi Aramco and PetroChina. Another refinery is being planned for Indonesia in partnership with PT Pertamina, said Saudi Aramco CEO Khalid al-Falih. This is all part of a larger, 10-year, US$200 billion plan to boost refining and exploration.

▪ Add one to China and Vietnam

Kuwait National Petroleum has announced plans to build a third refinery in Asia. This new plant would be in addition to two projects underway in China and Vietnam, said Deputy Managing Director Bakhit al-Rashidi while in Tokyo. The three refineries would have a total capacity of 600,000 barrels a day, with 300,000 barrel-a-day capacity in China’s Guangdong province and a 200,000 barrel-a-day refinery in neighboring Vietnam. However, al-Rashidi indicated that no decision has been made as to where the third refinery will be located.

▪ New Refinery in Kenya

Newly independent South Sudan will build a new refinery in Kenya. With its birth, the new country took over a 370,000 barrel-a-day oil refinery. However, this oil must pass through a pipeline and export terminal controlled by Sudan. The two countries, Sudan and South Sudan, have been unable to agree on transport fees. The solution is to build a pipeline through Kenya and a refinery near the port of Lamu, according to statements from South Sudan’s Information Minister Barnaba Benjamin and Kenya’s Prime Minister Raila Odinga.

▪ Beijing to release pollution data

Following a push by environmental activists, Chinese authorities announced that Beijing will be the first Chinese city to release hourly air-quality data on the PM2.5 standard. This means that particles smaller than 2.5 microns will now be tracked. Previously, data had been published on air particles up to 10 microns in diameter, the PM10 standard. The reporting switch is particularly important because smaller particles can lodge deep within lungs and are much more hazardous to health than larger ones. According to the World Health Organization, Beijing has a 121 PM10 reading, well above the global average of 71 and the WHO recommended level of 20.

▪ Japan’s car sales surge

Buoyed by government incentives, Japan’s car sales rose more than 40 percent in January this year, according to industry figures. The sales tax incentives favor fuel efficient vehicles, such as Toyota’s Aqua compact hybrid. Known as the Prius C outside of Japan, the car gets a listed 35.4 km/liter. For the Japanese auto industry, supply disruptions related to last year’s earthquake, tsunami and nuclear disaster hit Japanese automakers hard and dragged down their sales. In addition to these disruptions being behind them and tax incentives, the automakers are also benefiting from vehicles being purchased to replace those lost in the disaster.

▪ … While India’s are flat

Absent a cut in consumer financing interest rates, Indian automakers face a stagnant market this year, according to the Society of Indian Automobile Manufacturers. Initially, the forecast was for as much as an 18 percent growth, but there have been 13 interest rate hikes over the last two years by India’s central bank. These have driven the cost of credit so high that the middle class has been squeezed out of being able to afford a new car. The central bank is not expected to raise interest rates any more and may even cut them, said Society of Indian Automobile Manufacturers’ President S. Sandilya.

▪ Philippines’ Petron moves on Malaysia

Petron, a Philippine oil company, is investing in similar operations in Malaysia, with an eye toward the retail channel and synergies. It is part of a deal involving the downstream oil operations of ExxonMobil Malaysia. The assets involve a refinery in Port Dickson rated at 88,000 barrels-per-day capacity and 560 branded service stations. Petron owns a refinery in Bataan in the Philippines rated at 180,000 barrels a day. Petron President Eric Recto has said that the combined refineries could work together to boost the supply to each.

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