PetroChina 1H profit down 35 pct, CNOOC up 89 pct

Meanwhile, offshore producer CNOOC, which does not yet have significant refining capacity, reported an 89 percent jump in net profit thanks to surging prices.

PetroChina's 53.6 billion yuan ($7.8 billion) profit in January-June compared with 81.8 billion yuan in profit a year earlier.

Unlike other global oil giants that are reporting record profits thanks to surging prices, price controls on fuel and other oil products prevent PetroChina and other domestic refiners from passing on higher costs for imported crude oil to consumers, forcing the state-owned refiners to bear heavy losses.

PetroChina, whose parent company is state-owned China National Petroleum Corp., said the loss for its refining and marketing business surged to 59 billion yuan ($8.6 billion) in the first half of the year, compared with a 3.9 billion profit in January-June 2007.

Operating expenses jumped 64 percent to 510.7 billion yuan ($74.7 billion), mainly due to higher costs for crude oil, feedstock oil and refined products, it said.

While refiners struggle, CNOOC said its net profit rose in the first half of the year was 27.5 billion yuan ($4 billion), up from 14.6 billion yuan in the same period of 2007.

"Benefiting from high oil prices and effective cost control, the company's net profit for the first half of the year increased significantly," CNOOC's chairman Fu Chengyu said in a statement to the Hong Kong Stock Exchange.

Revenue rose 64 percent to 69 billion yuan ($10.1 billion) from 42.2 billion yuan, the company said.

CNOOC reported only a 1.1 percent increase in net profit in 2007 due to a large jump in a windfall tax on oil sales above $40 a barrel.