Good morning, ladies and gentlemen. Welcome to the company's call. Today with us, we have the management team of PetroChina. Please go ahead. Thank you.
Good morning, ladies and gentlemen. On behalf of PetroChina Company Limited, I would like to welcome you all and thank you for attending the company's 2019 third quarter results analyst conference call. My name is Wei Fang, Assistant Secretary to the Board. Today, I'm also joined by a number of my colleagues from the finance and IR team, including Madam Pei Ying, Assistant Secretary to the Board of Directors.
Hello.
And Madam Wang Ling, Senior Director and Head of Border Affairs.
Hello. Good morning.
And also Mr. Liang Gang, Security Affairs Representative and Senior Director for Compliance and Disclosure.
Hi, good morning.
And also Mr. Wang Kai Sheng, Director of Financial Disclosure.
Hi, good morning.
And Madam Yu Meng, Deputy Director of Finance.
Hi, good morning.
And also Mr. Zhang Lei, Director of Investor Relations.
Hello.
Now, it is my pleasure to invite Dr. Brian Xing, Deputy Director of Investor Relations, to present the company's financial and operation highlights for the third quarter 2009 and first nine months of 2009. Then I will introduce our major recent discovery and progresses, and we will have Q&A.
Good morning, ladies and gentlemen. I would like to give you a brief introduction of PetroChina's 2019 third quarter results. In the first three quarters of 2019, the world economic and trade environment became even more severe and complicated, and economic growth generally slowed down with comparably more downward pressure. China's economy maintained a steady and progressive development with an increase of 6.2% in the GDP as compared with the same period of last year. Economic operations were maintained in a reasonable range with a certain downward pressure.
The demand and supply in the global oil market was generally abundant. The international oil price fluctuated with the following tendency: after continuous rise at the beginning of the year, the average price decreased as compared with the same period of last year. The average spot price of North Sea Brent crude oil and the average spot price of the WTI crude oil were $64.59 per barrel and $57.08 per barrel, respectively, representing a decrease of 10.5% and 14.7% as compared with the same period of last year, respectively. The domestic refined product market was of abundant supply and demand, with intensified overcapacity and fierce competition. The market demand for natural gas continued to grow, but at a slowing down rate.
Facing the complex and difficult operating situations domestically and abroad, PetroChina adhered to the requirements for high-quality development, pursued its guidelines of steady development, strengthened organization of production and operations, pushed forward business structure adjustments, promoted reform and innovation, and continued to make more efforts in broadening sources of income, reducing costs, and improving efficiency, thus having achieved controlled production and operation. Due to the reduction in international oil price and intensified competition in the domestic refined oil market, its operating results decreased as compared with the same period of last year.
According to IFRS, in the third quarter of 2019, due to the oil price decline, PetroChina recorded a turnover of RMB 618 billion, increased about 1.8% year on year. Profit from operations was RMB 24.7 billion, and net profit attributable to shareholders of the company was RMB 8.8 billion. Basic earnings per share was RMB 0.048. In the first three quarters of 2019, PetroChina recorded a turnover of RMB 1.81 trillion, increased about 5.1%. Profit from operations was RMB 95.4 billion. Net profit attributable to shareholders of the company was RMB 37.3 billion. The basic earnings per share was RMB 0.204. As for the exploration and production segment, in the third quarter of 2019, the company produced 230.8 million barrels of crude, up about 2.3%, of which domestic production reached 187.1 million barrels, up about 1%, and overseas crude production reached about 43.7 million barrels, up about 8.4%.
Our marketable natural gas output reached 928.5 billion cubic feet, up about 6.7% year on year. In the first nine months of 2019, PetroChina produced 682.7 million barrels of crude, up about 2.9% year on year, of which domestic production increased about 1.4% and overseas production up about 10.3%. We also produced 2.89 trillion cubic feet of marketable natural gas, up about 8.9% year on year, of which domestic production increased about 9.7% and overseas production increased about 3.4%. The oil and gas equivalent output in the third quarter was 385.6 million barrels, up about 4% year on year. In the first nine months of 2019, the oil and gas equivalent output was 1.165 billion barrels, up about 5.2%, of which overseas production accounted for about 13.7% of the total production.
The operating profit for the segment in the third quarter was RMB 23.3 billion, and in the first nine months was RMB 76.9 billion, which makes the turnover increase about 32.9%. As for the oil price, in the first nine months of 2019, the average realized crude price was $61.49 per barrel, down about 9.5% year on year. The average realized natural gas price was $5.49 per thousand cubic feet, down about 4%. The oil and gas lifting cost was $11.28 per barrel, down about 1.7% year on year. As for the refining and chemical segment, the company processed 308.5 million barrels of crude in the third quarter, up about 6.7%, and processed 905.9 million barrels of crude in the first nine months, up about 4.3%.
In the third quarter, the refining and chemical segment recorded an operating profit of RMB 2.17 billion, of which the refining business recorded an operating profit of RMB 2.03 billion, and the chemical business recorded an operating profit of RMB 133 million. In the first nine months of the year, the segment recorded an operating profit of RMB 7.13 billion, of which the refining business recorded an operating profit of RMB 3.41 billion, and the chemical business recorded an operating profit of RMB 3.72 billion. As for the output of oil products, in the third quarter of the year, the output of oil products was 29.87 million tons, up about 10.1% year on year, of which the gasoline output was 12.5 million tons, up about 12%.
Kerosene output was 3.34 million tons, up about 13.7%, and diesel output was 14.03 million tons, up about 7.6% year on year. For major chemical products, in the third quarter, we produced 1.3 million tons of ethylene, and we also produced 460,000 tons of urea. As for the first nine months of the year, the output of oil products was about 86.6 million tons, up about 6.2%. Gasoline output was 37.08 million tons, up about 11.5%. Kerosene output was 9.38 million tons, up about 13%, and diesel output was 40.12 million tons, up about 0.4% year on year. For major chemical products, in the first nine months of the year, the company produced 4.29 million tons of ethylene and also 919,000 tons of urea.
As for the marketing segment, the sales of the refined oil products reached 48.8 million tons in the third quarter of the year, up about 4.4%, of which the sales of gasoline was 20.35 million tons, up about 13.1%. The sales of kerosene was 4.89 million tons, down 15.1%. Sales of diesel was 23.52 million tons, up about 2.6% year on year. In the first nine months of the year, the sales of the refined oil products reached 138.7 million tons, up about 0.8% year on year. The sales of gasoline was 56.85 million tons, up about 2.5%. Sales of kerosene was 15.02 million tons, down 1.1%. The sales of diesel was 56.8 million tons, flat year on year.
As for the operating profits, in the third quarter of the year, the marketing segment recorded an operating loss of RMB 1.48 billion, and in the first nine months of the year, the marketing segment recorded an operating profit of RMB 422 million. As for the natural gas and pipeline segment, in the third quarter of 2019, the segment realized operating profits of RMB 3.65 billion, up about 0.9%, and in the first nine months of the year, the segment realized operating profits of RMB 21.95 billion, up about 11.3% year on year. As for the fourth quarter of 2019, the company will continue to adhere to the policy of stable development, focusing on the following aspects. Firstly, striving to increase domestic oil and gas reserves, production, and efficiency.
The company will strengthen the implementation of the deployed risk exploration, expand exploration results, and increase the scale of available reserves, promote construction of key productivity projects, ensure the completion of annual crude oil production targets, strengthen the scientific development of the gas fields, and maintain stable operations of shale gas production organizations in order to strive to increase production, effectively control costs, and make every effort to promote domestic oil and gas reserves, production, and efficiency. Secondly, strengthen development and operation of new overseas projects. The company will deepen oil and gas cooperation along the Belt and Road countries and regions.
We are striving to seek scale discovery and strategic succession, promote capacity, and maintain stable production of existing projects, and further expand overseas oil and gas cooperation. Thirdly, promoting structural adjustment of the refining and chemical business, and reducing costs and increasing efficiency. We will improve and implement the high-quality development plan of the refining and petrochemical business, continue to promote transformation and upgrading of the refining and petrochemical business, strive to reduce costs and increase efficiency, and enhance the overall competitiveness and economic benefits of the refining and petrochemical business.
Fourthly, promoting volume and profitability in sales of refined oil products. We will strengthen the overall linkage and coordination among sales enterprises, highlight the efficiency of retail, improve the high-quality, strategic regional marketing network, and promote the expansion of product sales. Fifthly, promoting the efficiency of natural gas sales. We will optimize the resource structure with the allocation of domestic and imported gas resources. We will increase the inclination to the high-end markets, prioritize goals to ensure the full sales of domestic production, improve the differential marketing strategy, increase the online trading volume, and strive to promote price and efficiency. Sixthly, strengthening reform and innovation.
We will focus on deep exploration and shale gas exploration and development, as well as improving core technologies such as oil recovery, transformation, and upgrading of refining and petrochemical industries, promoting major special research projects, and increasing the promotion and application of technology integration. As for the key operating targets of 2019, the crude oil output reached about 75.4% of the year's target. Marketable natural gas output achieved about 75.9% of the year's target. Oil and gas equivalent output achieved about 75.6% of the target, and crude processing volume achieved about 77.4% of the target. That's all for PetroChina's 2019 third quarter results presentation. Thank you.
Now we go for the Q&A.
Thank you. Ladies and gentlemen, we are now polling for questions. If you'd like to register for questions, please press star one. Thank you. Again, please press star one for questions. Thank you. Ladies and gentlemen, please press star one for questions. Thank you. Our first question is Andy Lowe with Morgan Stanley. Thank you.
Good morning. Thank you very much for the presentation. I have two questions. The first question is regarding the first three quarters, this upstream, downstream divergent performance. If you look at the upstream, it's pretty good. But for the downstream, we see earnings see a large decline. Can you elaborate a little bit more regarding the reason and also the outlook for the fourth quarter of this year? The second question is regarding the National Pipeline Company. We see a lot of media reporting that this company will be established on October 18. Now it's already the end of October, but we haven't seen any news regarding this announcement of establishment. What's the detail behind that? If the company can make any comment regarding whether the national company can be established in November or even delayed to next year, any color will be very helpful. Thank you.
Oh, would you like to the Morgan Stanley to Andy? 我有两个问题。第一个问题主要是关于新公司前三季度业绩表现。我们看到上游和下游是两个不同的画面。上游表现比较好，下游的利润大幅下滑。我们想知道这个原因是什么。也请公司讲一下对于四季度上下游业绩表现的一个预期。第二个问题是关于国家管网公司成立的相关的事宜。媒体都说10月18号会成立国家管网公司，但是现在已经10月底了，我们还没有看到任何动作。那么公司在国家管网公司相关推出的一些详细的细则方面或政策方面有什么评论没有？或者是公司是否预期10月份会看到公司成立，或者是明年早些时候会成立？谢谢。
Hi, Andy. Let me take your question. You're right. There is a major divergence on the upstream and downstream probability, and it was also shown in some peer companies' performances as well. Actually, this kind of performance is echoed with the earlier conversation we had earlier this year regarding the three main themes in the domestic oil and gas sector in China. In upstream, there will be increased efforts to increase the exploration and production. As you can see, all the domestic Sinopec, PetroChina, Sinopec, they have very strong production growth. All of them, most of PetroChina and Sinopec announced very significant reserve discoveries fairly recently, which I will elaborate later. This is the one.
In terms of upstream, intensified efforts to increase, to boost the production, to increase the reserves. In the midstream, there will be a major regulatory change given to the potential establishment of the National Pipeline Company. I got a feeling this is related to your second question. I got a feeling that the clock is ticking, but honestly, I don't have a timetable at the moment. Third, main theme is a more competitive market in the downstream. I think all the major things actually happened. Now you can see the consequences. PetroChina now is in very challenging times, particularly in a very relatively sluggish market demand growth. Our profitability was actually hit by the sluggish demand. Related to the fourth quarter, generally speaking, fourth quarter was not a peak season.
I expect that fourth quarter, we will be similar. You'll be seeing similar profitability, similar kind of market conditions. We hope for the better, but I assume probably similar situation than compared to the third quarter. For us, I have to draw your attention that PetroChina is a more integrated company with more emphasis on E&P. I'm very proud, and recently, PetroChina was very proud to announce a number of discoveries in the Ordos Basin and in the Sichuan Basin. Recently, we have organized a field trip for shareholders to witness our successes in those areas. The recent exploration success has laid a very solid foundation for future production growth and profitability growth.
I understand the investors are very eager to see the results of those discoveries, but I have to tell you that the production success needs to take time to monetize. I'm very happy to announce that we have in the Ordos Basin, we were able to have this additional oil in place of 358 million tons, with estimated original oil in place of 693 million tons. For natural gas, we have accumulated the proven gas in place of over 1 trillion cubic meters in the Sichuan Basin. Those successes actually show our endeavor to carry out our strategy of innovation and high-quality development. Also, I would like to caution that those reserves numbers are proven and confirmed by the Reserve Assessment Office of the Ministry of Natural Resources.
Those numbers are not easy numbers. The confirmed reserve replacement number will be announced next year. You can see one of the major significant improvements for PetroChina, particularly for 2019, is the successes in the reserve addition. That's one of the key areas that I want you to focus on. Also, just now, Brian mentioned that we have a very robust upstream production growth. First half, our production of oil went up by almost 3%, our gas production went up almost by 9%. This is one of the historical production growth highlights. Over recent years, I think similar kind of growth you'll be seeing in the next two or three years with the support of the recent oil and gas discoveries. That actually increases our confidence and our capacities to bring up a very strong production growth and profitability growth. That's probably what I wanted to say.
For the downstream market, I think for next year, probably similar competitive environment or even more so. It's challenging, and we are trying our best to reduce our costs, to improve our product mix, to further improve the profitability. In terms of the establishment of the National Pipeline Company, at the moment, I think the government is working very hard on that. I think they already have established a preparation committee, but the timetable is not yet known. I understand the clock is ticking, and we are in active discussion and engaging with the government to pass on our shareholders' concern to further promote a more market-driven reform in order to safeguard the interests of all our shareholders. Thank you.
Thank you very much.
Thank you. The next question is from Neil with First Team, Hong Kong. Thank you.
Hello. Thank you very much. Just some questions on the gas side. First of all, we saw lower gas prices, natural gas prices for the first nine months. This was in contrast to Sinopec, where I think we saw slightly higher gas prices. Is this just a currency effect? How do you think about gas prices going forward? The second question is on the unit losses. We've seen lower per unit losses in Q3, which is an improvement, but still ¥21 billion losses for the year to date.
As we go into next year with an additional 5 BCM of Russian gas, would you expect that number to go higher? Then maybe just a third question, just on the market itself. We've seen slower growth this year in the gas market in China. As we come into the winter heating season, are you expecting to see growth remain at a slower rate than last year, or do you expect to see a pickup as we move into year-end?
我有三个问题。第一个问题是关于天然气方面的。我们看1到9月公司的天然气实现价格还没有实质化高，那么是不是现在确实是这种情况？那么对未来实现天然气价格公司有什么预期？第二个是关于天然气进口亏损这个问题。我们看现在公司亏损有210亿进口气。那么未来我们可以看到12月份俄气还要再进入，那么这个天然气进口会不会进一步加剧？请公司对这一点做出评论。第三个问题是关于市场方面的。我们看到冬季供气是一个高峰期，那么我们天然气的一个销量会不会和去年相比会有什么变化？
Thank you, Nail. I would like to pass this question to Mr. Wang Kai Sheng, Director of Finance.
你好。我想回答一下你刚才关注的天然气价格的问题。前三季度公司天然气出厂价是$5.49每千立方英尺，同比降低了4%。但是这个价格是包括了我们整个公司的国内的气，以及对外以及我们国际贸易的气。那么实际上我们国内天然气的出厂价是$5.94每千立方英尺，同比增长了0.7%。
First, I'd like to take your question related to natural gas, realized natural gas. So the first three quarters, the other factory realized the natural gas price was $5.49 per thousand cubic feet, down by 4% year on year. But one point I want to make is that this realized price is combined in both domestic realized price as well as the internationally trading natural gas price. In fact, domestically realized natural gas price was $5.94 per thousand cubic feet, up by 0.7% year on year.
国内天然气价格同比上升了0.7%。那么这是一个折算成美元的销售价格。那么如果是剔除美元的因素，因为美元是今年比上年同期是升值的，所以如果是剔除这个因素以后，那么人民币的价格是上升得更高。人民币是¥1.44元每方，同比上升了5.8%。
Just now, the number that I gave you, 0.7% increase year on year is in US dollars calculation. For the first nine months, the US dollar appreciation has also made an influence on realized natural gas price. In terms of RMB calculation, the figure is 1.44 RMB per cubic meter increased by 5.8% year on year.
第四季度是天然气的用气高峰。那么公司将会利用这个时期增加天然气的产量，然后采取一系列促进天然气价格的政策措施。在国家政策的范围内，我们做好推价的工作，努力提升天然气的效益。
We know that in the fourth quarter we will see peak utilization of natural gas. For PetroChina, we will spare every effort to increase the production of natural gas. A series of measures will be taken in this regard. We will also take advantage of the relevant national policies to push up the realized natural gas price.
现在我回答第二个问题，就是我们进口天然气的亏损。前三季度公司进口天然气亏损是¥217.64亿元，那么同比增亏了¥18.07亿元。
Now I'd like to take your second question related to the gas import loss. For the first three quarters, our total loss was ¥21.64 billion, increased by ¥1.807 billion.
实际上，我们公司一直采取各种有力的措施来控制进口天然气的亏损。我们上半年进口天然气的亏损是同比减亏的，而三季度增亏。主要原因是因为汇率，就是美元升值，汇率变化导致了进口天然气的采购成本增加。
A series of measures have been taken to do the loss control in this regard. For the first half, we see a decrease in the loss from the imported natural gas. But in the third quarter, we see an increase in the loss, which is mainly caused by the weak RMB currency, as well as the increase in the procurement cost.
那么未来我们要继续采取有力的措施来控制进口天然气的亏损。这些措施包括，比如说我们要优化进口气的结构，降低进口气的成本。第二就是尽量地把天然气往高价地区来进行销售。第三就是还是利用冬季用气高峰在国家政策允许的范围内，我们努力地提高推进天然气的销售价格等等。我们要采取一系列有效的措施。那么我们相信我们会努力地控制好进口气的亏损。
In the future, a series of effective measures will be taken to control the losses incurred in the imported natural gas. Firstly, we will optimize the structure of imported natural gas resources, trying to lower the procurement cost. Secondly, we will prioritize the sales of natural gas to those high-end markets. Thirdly, in the winter season and peak shaving season, we will take advantage of pricing policies to push up the realized natural gas price in this period. Overall, we are confident that in the future we will effectively control loss making in the imported natural gas.
Thank you.
Thank you. Next question is for the Basis City Group. Thank you.
Hi, good morning Manichin. I have two questions. One question is the follow-up question on the import gas losses. May I know the actual volume that we imported in the third quarter? Is it like an increase quarter on quarter or flat? I would like to have an idea on that. Secondly, may I know if the portion of long-term contracted volume in third quarter increased? How would this proportion change going into the fourth quarter? Because as I know, fourth quarter normally there will be more spot LNGs, which is less costly, which probably helps in terms of controlling the import gas losses. Lastly, the third question is regarding the gas price hike in winter. How should we expect the gas price hike this year if you compare to the winter last year?
我是来自花旗的苏锦强。我第一个问题还是接着上一个刚才您回答的天然气进口气亏损的问题。我们想知道最近三季度进口的量方面是增加了呢，还是持平的一个情况？那么长约的量是不是增加了？我们四季度看会不会有更多的长约量进来？那么现货来讲，可能现货采购更加经济。那么在未来第四季度我们在长约量上面会有什么变化？第二个问题是关于冬季天然气推价价格上涨实现的问题。和去年2018年的冬季采暖季相比，我们今年的推价会更有效的提高。
I will pass this question to Mr. Wang Kai Sheng.
你好。我想回答你刚才关注的问题。那么首先对进口天然气的数量，我们第三季度进口的天然气的数量是157亿立方米。那么跟二季度是基本持平的。我们也是在努力在控制长贸合同量，履行长贸合同量的同时，我们尽量地采购一些低价的现货贸易，这样尽量地降低采购成本。
The first question related to the volume that imported in the third quarter, the number was 15.7 billion cubic meters, which is quite flat comparing to the second quarter. On one hand, we try to control imported volume from long track, and on the other hand, we try to procure more spot. In this way, we can effectively control the loss making in the imported gas.
对于第四季度销售价格的问题，刚才回答完了之后，我们就要尽量地采取一系列有效的措施来提升我们的天然气销售价格，来降低进口气的亏损，来提升我们天然气业务的盈利能力。
As for your second question related to the price hike in the last quarter, just now I mentioned a series of effective measures will be taken to increase the realized price of natural gas in the last quarter while decreasing the loss making.
我们相信通过我们采取一些优秀的措施，那么今年四季度天然气的销售价格应该会比去年同期要持续地上升。
We believe, based on these effective measures, the full Q will see a price hike, and the realized price of natural gas will be higher than last year.
We hope we'll have a cold winter. 谢谢 好的 Thank you, Toby.
Thank you. Next question is Scott with JPMorgan. Thank you.
Hi everyone. Thank you ever so much for taking my question. A couple of things. On your production, it looks like, especially on the gas side, you might beat your full year target. Are you reiterating your full year production target? Do you think you might beat it slightly? CapEx was a little bit lower than we'd expect. Any views on that? Will you have a CapEx catch-up in the fourth quarter? I appreciate you can't give too much information on the NPC timing, and it's not in your hands.
But for some of the investors we get asked, are you allowed to go through some of the scenarios in which this pipeline for PetroChina Company might happen in terms of, obviously, cash compensation if the government has 51% stake? What happens to your import contracts? Can you load up debt into the new business? Are you allowed to give us any scenarios of what you've been thinking, even though we appreciate it's not your decision, it's ultimately the government? Thank you.
我是来自JPMorgan的Scott。我有一些问题。第一个是关于产量的问题。我们看到天然气这方面，我想问一下，我们全年的目标是否会实现？会不会超目标？产量会不会超目标？第二个问题是关于资本性支出。我们看到现在前三季度我们的资本性支出是低于市场预期的。那么我们是不是会在四季度把它追加回来？还有一个问题是关于国家管网公司的。我知道可能公司现在不方便就这个问题叙述太多，但是不知道是不是国家允许你们就一些方面可以给出一些，就是给市场一些解释，比如说这个对价，管网公司我们这个估值，还有我们这个占比，以及未来相关的一些长约合同跟管网公司会不会有相关。就是不知道公司是不是被允许能够在这些方面做出一系列的评论。
I will pass this question to Dr. Brian Sheng.
Thank you, Scott. I think you have noticed that the natural gas production of the company in the first three quarters reached about 2.89 trillion cubic feet, increased about 8.7%, which also achieved about 75.9% of the full year target already. So currently, we have not changed the full year target, but according to current operation progress, I believe it is highly probable that we will beat the target for the whole year. As for the CapEx, currently it's about the cash that we have paid, and we have also not changed the full year target yet. But we will arrange the full year CapEx according to operations and also according to the oil price. We may have some adjustment, but we will still need to see how the fourth quarter goes.
In regards to your second question regarding the national pipeline establishment, I have to be honest that we are not in the position to comment at this moment. But what I can tell you is that recently we have received a number of letters and concerns from our major shareholders in writing to our Board of Directors, to our management. The major concern was related to the valuation, the cash compensation, the dividend, the import gas losses, and responsibility for supply.
Those are just as you mentioned. So we have already passed on those concerns to the government bodies. I think that those kind of issues might, I think most likely to be taken into consideration by the government bodies. But at the moment, we are not in a position to comment on any of those kind of issues. Once this is decided or everything moves on, we have a disclosure board information. We would like to, we will definitely release those kind of information as soon as possible. Thank you.
Thank you. We have last question from Lawrence with POCI. Thank you.
Hi, Rachel. Hi, 我是张行长。早上好。是中银国际的刘志成。我想还是用中文问比较好。首先想问一下，这个其实我们发现公司的三季度这个EMP板块的利润环比二季度是比较明显的下降。那同时我们发现就是实现油价只是下降11%，就环比来讲。所以我就想问一下，是不是有一些除了油价，还有这个lifting cost以外的因素导致我们三季度这个上游板块的利润出现比较大的下滑？另外想问一下这个销售板块，其实我们看见三季度还是有一个亏损。刚才魏总也解释是市场的环境还是比较差，但是我们看见中石化其实三季度环比是有一些回升的。那我想问一下，这个是我们在这块是，就是我们本土这块做的还是比较不太理想，还是就是贸易那边也盈利也不太怎么样？谢谢。
我先回答您第二个问题，其实是翻译一下。
我是中银国际的Lawrence。我有两个问题。I'm Lawrence from BOCI, and I have two questions. The first one is related to the operating profit of E&P in the third quarter. We know there is a decrease quarter on quarter for the E&P, but we know the oil price was only decreased by 11%. I want to know that excluding the oil price as well as the lifting cost, those issues, is there any other reasons for the decrease of E&P segment profits? The second question is related to the marketing segment. We know that the company is still suffering from a big loss in the third quarter, but we know different picture for refining. I want to know that it's just the marketing not good in domestic China or the international trading is also not desirable for the third quarter.
Lawrence，你好。我先讲一下，回答你第二个问题，然后给我们的同事回答第一个。就是实际上在三季度我们的炼油和销售实际上按季度都是有改善的。所以说我刚才提到的就是说我们也希望四季度的环境能够跟三季度一样，所以就是让这个业绩能够stabilize。所以说actually the second Q on Q comparison, we have similar trend with Sinotech, but given to the magnitude of the downstream, so our performance was not visible. The improvement was not visible. So actually we hope that so basically Q on Q on the refining marketing, we saw Q on Q improvement. But so that's the reason I said that we hope that the fourth quarter will be somewhat similar to the third quarter. Related to your first question, let me go to Mr. Wang.
好的。我回答一下第一个问题。第一个问题你问的说勘察板块的三季度的利润跟二季度的变化。那么三季度的勘察板块经营利润是¥233亿元，同比环比减少了¥160亿。那么主要原因有两个原因。一个是油气的价格环比下降。第二个原因就是因为我们这个储量的增加以及油气产量。因为今年上半年的油价下降了，导致我们根据FEC规模评估的油气储量减少。那么另外还有我们的油气产量增加，所以导致我们机器的折旧增加。主要是这两个原因。
For the third quarter, EMP operating profit rate ¥23.3 billion, down ¥16 billion comparing to the second quarter. The change is mainly caused by the first one is the decrease in realized price. Second one is that due to the decrease in the international oil price, according to the requirement of FEC, we devaluate our reserves. At the same time, the production increased, so we accrued more DD&A in third quarter.
好，谢谢。在我们结束之前，我想也简单地把我们公司的一个意愿也是讲一下。就是第一个，我想我们相信我们公司虽然目前处在一个比较困难的挑战的环境，我们也有能力，也有意愿继续保持稳定满意，就是稳定的派息政策，回馈长期股东。第二个就是我们会在这个管网改革中努力坚持推进市场化的方向，确保股东的利益。第三个，公司也会不断地优化内部的运行，提高我们的回报，我们的产量和盈利，尤其是上游，降低我们的成本，提升公司的回报率和提升公司的管理。
Finally, I want to make a conclusion as follows. First, we know the environment is not good, but China is facing many challenges. But for us, we believe we have the ability and we have the willingness to stabilize our production, to stabilize the dividend payout ratio, to pay back to our shareholders. As for the NPC establishment, I think in this process, we will try every effort to safeguard the interests of our shareholders. Finally, we will further optimize the operation management as well as the production of our company, try to improve our profitability and to give better feedback to our shareholders.
再次感谢大家对中石油的支持和关注。谢谢大家。
Thank you once again for your support and interest for China.
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