China’s CNPC cuts 2011-2015 overseas investment plan

State-owned China National Petroleum Corp (CNPC) has cut its annual overseas oil and gas investment plan for the five years ending 2015 to focus on returns rather than output.

The parent of PetroChina Co Ltd (0857.HK)(600028.SS)(PTR.N) did not specify the percentage of cuts or annual investment plan.

“To evaluate an overseas project, (we) should look at overall returns instead of just production,” CNPC Deputy General Manager Wang Dongjin was quoted as saying in the China Petroleum Daily, a company newspaper.

The top oil and gas company in China had set specific indicators including returns on capital, net cash flow and internal rate of return for overseas projects, and was no longer only targeting fast expansion, the report said.

CNPC sealed nine oil and gas deals in 2009 alone, four of which have production capacity of more than 10 million tonnes of oil equivalent per year. It was operating 81 oil and gas projects in 29 countries, up from 58 projects in 22 countries at the end of 2005, according to a separate report in the company newspaper.

It had 595 service and engineering units operating in overseas markets, the second report said.

Crude output from overseas projects increased at an annual rate of more than 15 percent in the past five years, it added.

In 2009, CNPC produced a record 69.62 million tonnes, or 1.39 million barrels per day (bpd), of crude oil from its overseas projects, although output was shared by the company and its foreign partners.

CNPC units in Kazakhstan and Turkmenistan would develop new projects in the coming five years, while maintaining steady output growth in existing projects, a development that would greatly boost its production in central Asia, the report added.