The crude oil business saw a significantly improved operating result for the year, which was primarily the result of a higher average realised crude oil price and the implementation of ongoing cost control measures.
Both the Seram Block in Indonesia, in which CITIC Resources holds a 51% interest, and the Yuedong oilfield in China, in which CITIC Resources holds a 90% interest, achieved a turnaround in operating results, and CITIC Resources recorded a higher share of profit in respect of its interest in CITIC Canada Energy Limited, a joint venture established with JSC KazMunaiGas Exploration Production, through which CITIC Resources owns, manages and operates the Karazhanbas oilfield in Kazakhstan.
CITIC Resources achieved stable production that was comparable with 2016, helped by a series of optimal maintenance plans to minimise the negative influence on production caused by the continuing natural decline of existing wells. CITIC Resources’ average daily oil production was 49,980 barrels (100% basis(1)) for the year, compared with 50,580 barrels (100% basis) in 2016. The Seram Block recorded an average daily production of 2,820 barrels (100% basis), representing a drop of 25% when compared with 2016. The Yuedong oilfield maintained an average daily production of 7,960 barrels (100% basis), which was comparable with 2016.
The Karazhanbas oilfield was the largest contributor to CITIC Resources’ overall oil production, reaching an average daily production of 39,200 barrels (100% basis), which was comparable with 2016.
(1) 100% basis: based on the production of every oilfield.
CITIC Resources holds a 14% participating interest in the Coppabella and Moorvale coal mines joint venture in Australia as well as interests in a number of coal exploration operations in Australia. Despite the inclement weather in the second quarter of 2017, sales volumes for the coal segment increased when compared with 2016.
In China, CITIC has a 30% interest in Xin Julong coal mine in Shandong Province. This coal mine has a production capacity of 7.5 million tonnes, which was fully utilised in 2017. With coal prices rising in response to Chinese policy changes designed to cut excess coal capacity, Xin Julong recorded a net profit that was 130% higher than the same period last year.
Sunburst Energy manages coal-fired power stations in China with a total installed capacity of over 6,400MW. In 2017, these stations generated 31.3 billion kWh of electricity, similar to 2016 levels, and supplied 14.31 million GJ of heat, 17% more than last year, which was contributed primarily by the Ligang Power Plant in Jiangsu Province with an installed capacity of 4,040 MW. Due to Chinese supply side reforms, coal prices remained high throughout the year as energy conservation and emission reduction standards continued to rise. As a result, the production and operating costs of power plants increased significantly, hence lowering profit by 59% compared with last year.
In 2017, new investments in the power generation business progressed well. Construction of the 2×1,000MW thermal power generators at Shenglu Power Plant was completed on schedule. Overseas, the Company formed a 50:50 joint-venture with its strategic partner ITOCHU and through this vehicle acquired a 22.5% interest in a wind farm in Germany, of which CITIC holds an 11.25% interest. This project represents the resource and energy unit’s first new energy project outside China.