Welcome to our results briefing of H1 2018. I'll introduce our colleagues: President Zhang Jianhua, our Vice Chair, Mr. Chai Shouping, our CFO, and Mr. Ling Xiao, our Vice President. The President will address the audience. Dear guests, ladies, gentlemen, and friends, good afternoon. I'm more than pleased to meet you here. First, on behalf of PetroChina Board of Directors and Management Team, I extend a warm welcome to you all. Thank you for your long-standing support and attention to our company. This year, with rising global oil prices, increasing demand for refined oil, and booming demand for gas, we seized opportunities and developed prudently. We focused on resource market, internationalization, and innovation, increased income, and reduced costs, and thus saw results better than expected. First, our profits soared.
With market orientation and profit as priorities, we made timely adjustments according to changing markets and favored well-performing, high-quality, and promising areas with more resources so as to maximize returns on investment and products. In H1, our operating income totaled CNY 1.1 trillion, with an operating profit of CNY 65.89 billion, up 13.6% and 80.6% respectively. Average return on invested capital is recovering stably. Free cash flow remained positive. Fiscal status continued to be sound. Interest-bearing debt and gearing were down by 7% and 1.6% points from the beginning of the year.
Secondly, production indicators are growing steadily. We conducted precise resource allocation and optimized operation of oil and gas. Exploration efforts found and secured many large and high-quality reserves. Transformation and upgrading of refining business picked up pace. Sales and production of gas and refined oil both increased. Overseas, new projects saw smooth implementation. Our core business maintained prudent momentum.
In H1, we produced 740 million barrels of oil equivalent at home and abroad, up 1.5%. We sold 58.035 million tons of refined oil and 78.42 bcm of gas, up 6.1% and 15.1%. Thirdly, costs continued to drop. PetroChina engaged in massive campaigns to increase income, cut costs, and improve profits, focus on benchmarking and fine management, market-based operation, expanding pilot zones with more management autonomy, interior circulation of mining rights, integrated joint assessment, and streamlined staffing structure. Therefore, major cost indicators are dropping, with processing fee, marketing fee, and depreciation and depletion down by 0.4%, 0.1%, and 1.5% respectively, adjusted for exchange rate. Oil and gas lifting costs declined by 1.8%. Fourth, potential for future development remains substantial.
Refine the dynamic adjustment for the rest of the 13th Five-Year Plan, with priorities in expanding shale gas production, adjusting product structure, developing sales network, improving sales and profits of gas, optimizing overseas assets. The sustainable development of our core business is guaranteed as the construction of many key projects are well underway. Besides, our efforts in safe and clean production and sales are so fruitful results, with applause from all walks of life. These achievements would be impossible without your help and support. Therefore, on behalf of the PetroChina Board and Management Team, I hereby extend sincere gratitude to you all. The context also contains risks: escalating Sino-U.S. trade frictions, fierce competition home and abroad, rising geopolitical concerns. They all pose challenges to us. But from a generic perspective, we are still going through strategic opportunities. There is a growing rigid demand for oil and gas globally.
International Oil Market is being rebalanced. Oil price will remain high with fluctuations. The Chinese government is determined to build a healthy ecology, form a clean, low-carbon, safe, and efficient energy system. Thus, clean energy like gas has a large potential. Belt and Road Initiative is pressing onward. Oil and gas industry and enterprises are going through deeper reforms. Open-up policies are coming into effect. Policies on corporate reform are released in a row. These are all important opportunities for us. The Board and Management Team will remain committed and confident. Seize opportunities, meet challenges, and fend off risks. We are fully confident about our future development.
Based on the context and our own case, with thorough studies by the Board and Management Team, now and in the near future, PetroChina will adhere to the principle of prudent development, focus on innovation, coordination, green and low-carbon, open-up and cooperation, co-building and sharing. We enhance our abilities on asset management, reform and innovation, quality control, risk prevention, and achieve high quality in business development, growth drivers, development basis, and business operation. High quality business development means we'll continue to work on oil and gas business chain and value chain with better investment and asset structure. Such efforts will enable stable growth of operating income and profits. High quality growth drivers means we'll maximize the role of innovation talents, go deeper with corporate reforms. Thus, our TFP will continue to rise.
High quality development basis means we'll strengthen quality control and eliminate hidden dangers, ensure safe production and green development. Therefore, we'll see improved quality of construction projects and products and HSE performance. High quality business operation means we'll enhance analysis of macroeconomy and market trends, improve risk identification, alarm, and prevention system to guarantee uninterrupted production and operation. In H2, we'll focus on high quality development, benchmark against top companies and best practices, leverage our business integration, strengthen resource allocation, product structure, sales, and profits of refined oil and gas, and we'll work on reform and innovation along with management. We'll carry on the campaign on more income, lower costs, and higher profits, improve risk prevention and compliance management, consolidate oil and gas business chains to fulfill all the tasks and targets of the year. First, market orientation.
We'll research more on product markets and marketing, polish the system of market-based production, production-backed sales, and balance between volume and profits. PetroChina will respond faster to the market, arrange better-organized production, sales, and trade, improve the coordination of subsidiaries, and ensure the smooth flow of production, refining, and sales. Second, resource allocation. We'll remain committed to E&P, tackle problems in the upgrading and transformation of refining and petrochemical companies, actively promote sales and profits. We'll coordinate the use of investment, R&D, and labor, acquire cost-effective resources, produce high-quality products, and guarantee stable supply of gas through various means to further enhance oil and gas business chain's profitability. Third, innovation-driven development. We'll eliminate obstacles in core business, combine plan execution and performance evaluation, forge faster response to market changes. We'll continue to add income, cut costs, and improve profits, and fulfill relevant targets.
We'll enable sustainable development of data, upgrading and transformation of refining and petrochemical facilities with technical strengths, speed up problem-shooting, technology promotion, and application R&D, achieve more digitalized, internet-based, and intelligent development. Innovation will play a larger role in profits improvement. Ladies and gentlemen and friends, we truly hope investors and analysts can, as always, pay close attention to and support us. With your help, we'll continue to prosper and fulfill our visions. Now, my colleague, Mr. Chai, will brief you on the financial performance of 2018. First half, thank you all. Thank you. Now, I'll review and analyze our financial performance of H1 2018. PetroChina had a turnover of CNY 1.1 trillion, up 13.6%. Operating profit CNY 65.891 billion, up 80.6%. Net profit attributable to shareholders of parent company CNY 27.088 billion, soaring 113.7%. Basic earnings per share CNY 0.15 , up CNY 0.08 .
In light of rising global oil price and our own case, PetroChina made appropriate CapEx arrangement, totaling CNY 74.618 billion, up 19.7%, mainly allocated in EMP, expansion of refined oil sales network, and acquiring a Abu Dhabi project. We value quality and return of investment and optimized investment structure to enhance sustainability. EMP as a basis of our development remains priority. EMP received CNY 58.361 billion in CapEx, up 28.8%, accounting for 78.2% of the corporate total. PetroChina continued low-cost development and campaigned to add income, cut costs, and improve profits. Major costs remained well contained. Lifting cost of oil and gas was $11.49 per barrel, adjusted for exchange rate, down 1.8%. Processing cost of crude CNY 158.24 per ton, down CNY 0.6. Marketing cost CNY 289.27 per ton, down CNY 0.35. PetroChina refined its investment by curbing debt and interest and optimizing debt structure. Fiscal conditions remained sound.
Total assets CNY 2.41 trillion, about the same as last year. Debt ratio 41.9%, down 0.7% points. Gearing 23.6%, down 1.6% points. We have a plentiful cash flow. Operating cash flow was CNY 146.158 billion, up 0.9%. Free cash flow totaled CNY 48.422 billion, remaining positive for the fifth consecutive year. In H1 2018, E&P's operating profit was CNY 29.889 billion, up CNY 22.973 billion. Price changes of oil and gas added CNY 43.332 billion. Realized prices of crude averaged $65.81 per barrel, up 32.5%. Increased sales added CNY 12.542 billion.
Crude sales accounted for CNY 9.027 billion and gas CNY 1.156 billion. OpEx and other expenditure cut CNY 32.901 billion. Purchase accounted for CNY 23.944 billion. Taxation except for income tax CNY 4.196 billion, including CNY 1.178 billion as windfall profit tax. Exploration cost accounted for CNY 3.893 billion. Refining and petrochemicals operating profit was CNY 23.208 billion, up 46.5%. Refining's operating profit was CNY 16.91 billion, up 84.5%.
Increased gross profit contributed CNY 6.713 billion. Increased volume CNY 5.873 billion. OpEx and other expenditure cut CNY 4.84 billion. Petrochemicals operating profit was CNY 6.298 billion, down 5.6%. Price changes of chemicals helped gain CNY 6.244 billion. Sales helped gain CNY 1.339 billion. OpEx cut CNY 7.958 billion, with much of it on necessities like purchase and service, totaling CNY 7.478 billion. The operating profit of sales sector was CNY 4.485 billion, down 21.1%. Domestically, operating profit of sales was CNY 1.046 billion, down CNY 1.703 billion, mainly from ample supplies and fierce competition.
Declines in gross profit cut CNY 2.768 billion, and increase in sales added CNY 1.083 billion. Operating profit of trade CNY 3.439 billion, up CNY 506 million. Operating profit of natural gas and pipeline was CNY 16.105 billion, up CNY 2.171 billion or 15.6%. Natural gas sales suffered a loss of CNY 3.016 billion, down CNY 4.923 billion. City-gate prices averaged CNY 1.69 per cubic meter, up 7.2% in China.
Home-produced gas gained CNY 10.397 billion, up CNY 6.547 billion. Imported gas and LNG caused a loss of CNY 13.413 billion, up CNY 1.615 billion. Pipeline business earned CNY 19.05 billion, down CNY 3.823 billion. Synergies earned CNY 4.298 billion, down CNY 1.18 billion. Increase of OpEx cut CNY 118 million. PetroChina values returns to shareholders and maintained a stable dividend policy. Since 2016, on top of the 45% payout ratio, PetroChina also issued additional special dividends. To better reward shareholders, the board suggested an interim dividend of CNY 0.0888 per share, among which the 45% payout ratio accounted for CNY 0.0666. Special dividend accounted for CNY 0.0222. Total dividend reached CNY 16.252 billion with a payout ratio of 60%. Now, our Vice President, Mr. Ling Xiao, will talk about the operation performance of H1 2018 and our expectations for H2. Thank you all. Thank you, Mr. Chai Shouping.
Now, I'll brief you on the operation performance of H1 2018 and our expectations for H2. In H1, PetroChina adhered to the principle of prudent development, seized the opportunity of rising global oil price, steady increase in demand for refined oil, and booming demand for gas, worked hard to increase reserves and production, and achieved operation performance better than expected. Domestically, E&P efforts focused on boosting gas production while stabilizing that of oil, that resumed primary source of profits. Overseas oil and gas cooperation saw sound development with more sustainability. Refining and petrochemicals are transformed and upgraded more rapidly with improving profitability. Refined oil sales are expanding, and so is the marketing ability. Natural gas and pipeline business was improved and optimized with increase in volume sales and profits. Now, I'll talk about the details of these five aspects. Domestically, there are achievements in these two aspects.
We focused on efficient exploration, gas exploration, preliminary prospecting, and risk-taking explorations. We secured newly added proved reserves totaling 680 million tons, accounting for 65.7% of the yearly target. Major findings include these: in Junggar Basin, two exploration sites saw newly founded industrial oil flow. In Ordos, oil exploration made important progress. In Tarim Basin, natural gas exploration made important new achievements. In Songliao and Bohai Bay Basin, many new wells were drilled with million-ton productivity. In Sichuan Basin, deep shale gas exploration made new breakthroughs. PetroChina focused on oil and gas production. Key capacity-building projects are going well. We set the yearly target at 100 million tons of stable oil production, with special focus on key projects like Xinjiang Mahu and Changqing Huaqing. With efforts in gas field operation, production is growing steadily. Key projects in Changqing and southwest are advancing rapidly.
PetroChina accelerated shale gas development, producing 1.81 bcm in H1, up 14.9%. Overseas oil and gas corporation saw three major achievements. We actively engaged in international oil and gas cooperation and signed a number of new agreements. We completed the delivery of Abu Dhabi project and lifted oil for the first time, hence began to recover our investments. PetroChina and Kazakhstan signed the agreement to renew oil contracts and deepen oil and gas cooperation between the two countries. PetroChina values large and high-quality reserves that allow fast access. We focused on key exploration projects, deepened geologic studies, and focused on projects like Halfaya in Iraq and Aktobe in Kazakhstan. We efficiently implemented important projects, including phase three of Halfaya in Iraq, MPE-3 in Venezuela, and phase 2.2 in Chad. These projects all progressed smoothly. With efforts home and abroad, in H1, PetroChina produced 438 million barrels of crude, up 0.4%.
Marketable natural gas totaled 1.79 TCF, up 3%. Oil and gas totaled 740 million BOE, up 1.5%. Overseas production, 97 million, accounts for 13.2% of the corporate total. Refining and petrochemical business have five important achievements. We strengthened benchmarking and in-depth planning. Major economic and technical indicators all improved significantly. We optimized resource allocation and product structure to maximize overall profits, and here are the data. We processed crude totaling 552 million barrels, up 16.1%. Produced refined oil totaling 51.488 million tons, up 19%. Gasoline, kerosene, and diesel went up by 22.2%, 45.1%, and 12.7% respectively. PetroChina also adjusted its product structure. Diesel gasoline ratio of production was down to 1.23. Highly profitable refining products now account for 66.7%, and petrochemical plants maintained high utilization ratio. Chemical production totaled 11.696 million tons, flat from same time last year.
Ethylene totaled 2.669 million tons, down 5.9%, mainly due to scheduled maintenance breaks of Sichuan Petrochemical Company. PetroChina also sped up scheduled construction of major projects, including renovation of refineries in Liaoyang, North China Petrochemical, and upgrading of gasoline and diesel for National VI standards. Refined oil sales are expanding. Sales business remained market-oriented. We strengthened the link between production and sales to optimize flow. We sold 90.334 million tons of refined oil, up 10.7%. Gasoline, kerosene, and diesel went up by 18.1%, 11.7%, and 4.9% respectively. Sales domestically totaled 58.035 million tons, up 6.1%. Gasoline, kerosene, and diesel went up by 5.6%, 25.2%, and 4.3%. We now operate 21,386 gas stations. uSmile Chain Store, with its professional management, saw increasing non-oil profits. In terms of international trade, we increased refined oil exports totaling 6.356 million tons, up 22.8%.
Natural gas and Pipeline business was improved and saw important achievements. Faced with tight supply in winter, PetroChina took various measures to gather needed resources, strictly fulfill the contracts, and met the demands of households and major cities. PetroChina, by doing so, set up responsible corporate image and boosted its gas sales in China. With marketing expertise, PetroChina favored efficient markets with more resources and pushed for online trading. In H1, PetroChina sold 101.4 bcm of natural gas, down 2.6%, mainly due to declines in international trade. And sales in China actually improved, reached 78.42 bcm, up 15.1%. Through pre-planning, PetroChina has already signed most of the sales and purchase contracts of the year. Many key projects made major progress. Tunnel number two of the border section of Power of Siberia was completed ahead of time. Pipelaying of the northern section is already half done.
The third West-East Gas Pipeline is reaching Fujian and Guangdong. LNG terminals in Tangshan and Rudong are being expanded, and the new one in Shenzhen has already begun construction. Pipeline operation is further optimized, with crude and gas volume up by 16.4% and 8.1% respectively. In H2, PetroChina, through analysis, we still face many challenges and increasing uncertainties. First is that global oil price is in rational range, yet still with fluctuation and downturn risks. Secondly, China's petroleum market is recovering. The supply of gas is still falling behind. Third, policy changes are bringing opportunities but also bringing more and higher requirements. Fourth, we have a complicated international landscape, and the risk overseas will probably increase in the future. Still, the overall context works in our favor.
PetroChina will focus on high-quality development, benchmark against top companies and best practices, draw our strengths as an integrated company, and continue to develop in a prudent manner, further add income, cut costs, and improve profits to further strengthen our oil and gas business, and we'll work on these following seven aspects. First, add reserves and expand production of oil and gas in China. We'll step up exploration and development, maintain oil supply, boost gas production, and improve profits. Add large and economically recoverable reserves, enhance coordination and planning of key projects, stabilize production in mature oil fields, build up productivity in major gas fields, advance large-scale shale gas projects that are green and profitable, ensure existing gas storage reach design capacity, and prepare to build new ones. Control costs from a comprehensive perspective. Secondly, we'll continue to expand overseas cooperation.
We will fully implement current contracts and highlight efficient exploration with careful planning, focus on in-depth development and optimal operation, improve overseas business risk prevention and asset optimization, and seek potential high-quality acquisition and equity swap. Thirdly, we'll optimize operation of refining and petrochemical business. We'll pursue benchmarking in this sector as well. Press ahead with transformation and upgrading, focus on key construction and restructuring, timely fulfill the upgrading for National VI gasoline and diesel standards, balance and optimize resource allocation, adjust processing route based on market demand, improve product structure by producing more high-performance and high-added value products. Fourth, we'll expand sales of refined oil and relevant profits, prioritize sales of our own products, and maximize overall profits by making rational purchase and maintain smooth operation of crude business chain. We'll enhance the integration of wholesale and retail, improve in place rates to expand sales and relevant profits.
We will also increase refined oil exports to profit more through trade. Fifth, we'll guarantee supply and benefits in gas and pipeline business. We'll fully investigate market demand and well coordinate home-produced and imported gas, enhance the interconnectivity of pipeline networks, favor mid to high-end markets with more supplies, prioritize home-produced gas, use exchange centers to ensure the profitability of uncontracted gas, implement the policy of convergence of prices for residential and non-residential users, ramp up market exploration, expand direct supply users, and continue scheduled construction. Sixth, strengthen security risk prevention and environmental protection. We'll further facilitate HSE management system, complete safe production accountability system, intensify surveillance over contractors, and make careful planning of production and risk reduction. We'll underline the role of business reforms and innovation.
We'll reinforce high-quality development, step up reform efforts, employ scientific and innovative management, deepen internal reforms, continue to add income, cut costs, improve profits, and bolster business operation with innovation. Ladies and gentlemen, in H2, we'll proceed with the principle of high-quality and prudent development, do our best in the operation of all sectors, and orient towards top energy companies in the world. Thank you all.