Lower oil prices dented first-half earnings at oil giant PetroChina and offshore specialist CNOOC, but helped Asia's top refiner Sinopec, though rebounding crude prices may reverse their fortunes in the second half.

Crude prices hit a 19-month low below $50 a barrel in January before recovering to a 10-month high above $70 a barrel at the end of June. Depressed prices are a windfall for refiners but hit profits for producers.

Analysts say the rebound, which peaked at a record $78.77 at the beginning of this month, could flip earnings growth expectations for China's oil triumvirate in the second half, especially as the government is expected to keep a lid on product prices in the near future.

The refining arms of Sinopec and PetroChina will have suffered from losses again in the third quarter when oil prices jumped above $70, said Tom Chan, an analyst at Sun Hung Kai Investment Services.

But I don't think the government will raise oil products prices in the near term because of high inflation and because they had made profits in the first half.

A decree issued this month by China's top economic planning body, the National Development and Reform Commission, urged refineries to boost output and curb exports and warned against unauthorised wholesale price rises, showing official concern about fuel shortages and inflation.

China last raised retail gasoline and diesel prices in May 2006 when the oil price was around $70 a barrel. It tweaked gasoline prices lower in January when crude was $53.

A windfall tax on oil earnings imposed by the government since March 2006 also dented firms' profits.

PetroChina, the world's No. 2 oil company by market capitalisation, should kick off earnings for the Chinese oil trio on Thursday with a 4.8 percent dip in January-June profit to 76.7 billion yuan ($10.1 billion), based on the average forecasts of six analysts polled by Reuters.

Refiner Sinopec is expected to enjoy a near-60 percent jump in first-half earnings to 34.1 billion yuan ($4.49 billion), according to forecasts by four analysts.

And CNOOC, which draws the bulk of its profit from finding and developing oil and gas, could post a 15 percent fall in interim earnings.

FINDING RESOURCES, FUNDING SOURCES

China, the world's second-largest oil consumer, is not producing enough to meet fast-growing demand, so overseas acquisitions remain high on the agenda for all three companies, after a string of purchases from Kazakhstan to Nigeria.

To fulfill their ambitions both at home and abroad, both PetroChina and CNOOC plan to tap China's red-hot equity markets.

PetroChina has shareholders' approval to launch a domestic share sale, and plans to issue up to 4 billion shares to raise about 40 billion yuan ($5.3 billion) based on the company's Hong Kong share price of around HK$10.48 on Monday.

CNOOC executives have hinted that a Shanghai or Shenzhen listing could be on the cards this year.

Investors will scour Sinopec's results for any hint of strategy changes under new chairman Su Shulin. Predecessor Chen Tonghai stepped down two years early in June, for what the company said were personal reasons.

Shares in PetroChina rose 4.5 percent in January-June, lagging Sinopec and CNOOC's 20 percent gain, and a 16 percent rise in the index of mainland Chinese stocks listed in Hong Kong.

PetroChina trades at just above 12 times forecast earnings and Sinopec and CNOOC are at 9.2 and 12.6 times, respectively, versus ExxonMobil's 12 and BP's 10.

H1 Consensus Change No. of forecasts

(bln yuan) yr/yr (pct) PetroChina 76.7 -4.8 6 Sinopec 34.1 +59.3 4 CNOOC 13.8 -15.2 4 ($1=7.591 Yuan)

China