Good morning, dear investors and ladies and gentlemen, I'm Wei Fang, Deputy Head of the General Office and Secretary to the Board. Welcome to PetroChina's 2021 Q3 post-results conference call. For the materials concerning our third quarter results, you can download it on our website and in the Shanghai Stock Exchange and Hong Kong Stock Exchange. To begin with, I would like to give a brief introduction to PetroChina team having today's meeting. They are CFO and Board Secretary, Mr. Chai Shouping, Madam Pei Yin, the Deputy Head of the Secretariat to the Board, Deputy Head of the Finance Department, Mr. Wei Qingbo. We're also joined by colleagues from Finance Department and International Department. Now, I would like to pass the floor to CFO, Mr. Chai Shouping.
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Dear investors, ladies and gentlemen, good morning. It gives me great pleasure to join you virtually once again. On behalf of PetroChina, I would like to extend hearty gratitude to all shareholders and analysts for your long-term trust and support.
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Yesterday, PetroChina convened a board meeting, adopted the company's 2021 third quarter results, and approved the appointment of a new Vice Chairman. Mr. Hou Qijun was appointed as the Vice Chairman of PetroChina. In the meanwhile, to further boost our endeavors in fields like ESG, we have made some proper adjustments to the committees under the board.
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In 2021, PetroChina took advantage of the favorable conditions in China's strong economic recovery, the rising market demand, and international oil prices, coordinated our efforts in production operation, quality and efficiency improvements, and ESG management. The oil and gas industrial chain has maintained stable operation, with significant increase in our development efficiency. A number of highlights were reported in the oil and gas exploration. We have reported major breakthroughs and discoveries in key basins like Junggar, Ordos, Sichuan, and Bohai Bay. Our reserve base is further expanded with a more consolidated resource base. We have seen improvement in both volume and efficiency in oil and gas production, refining petrochemicals, and oil and gas fields. We have witnessed our ever-improving product mix, and we have taken faster pace in new energy and new material business, with greater low-carbon and digital transition making further headway.
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All business segments of PetroChina remain profitable. In the first nine months, net profit attributable to the parent is RMB 75.1 billion. This is the best in the past seven years for the same period, and the company's investment value is further boosted.
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PetroChina highly values green, low-carbon, and oil transition. We have incorporated green low carbon into one of our five corporate strategies. In terms of green and low carbon transition, the company will take a prudent approach. We'll fully leverage our comparative strength to further increase the share of natural gas and chemicals in the total percentage, and we will coordinate the speed and efficiency and to push forward the development of photovoltaic and hydrogen and other new energies in an orderly manner.
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Dear investors, COVID-19 pandemic is still evolving around the world, and there has been some divergence in terms of economic recovery across the world. We have seen that for major economies in the world, they have maintained monetary easing policies and robust demand in the commodity market. In particular, in China, our economic recovery is stable and retain a strong momentum. There is still potential for growth in oil products market and natural gas demand registers fast growth. The government has taken further measures to improve the business environment and promote fair competition. This has all laid a solid foundation for the company's further growth. We have every confidence that we could ride on the momentum and complete the annual targets. Remain committed to our original aspiration for rewarding our shareholders and fulfilling the corporate responsibility and deliver even greater performance to the shareholders.
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Now, I would like to invite my colleague to brief you of PetroChina's third quarter results. Thank you.
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Thank you, Mr. Chai. Now I would like to pass the floor to Brian, the Deputy Chief Representative for our Hong Kong office, to brief you on our third quarter results.
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Now, I would like to give you a brief introduction of PetroChina's third quarter results. In the first three quarters of 2021, the world economy is still recovering, but due to the repeated resurgences of COVID-19, the development of the economies is following a divergent trend. The international oil market demand is undergoing a fast recovery, with the demand and supply at stage of tight balance and international oil prices has continued to increase. As domestic COVID-19 pandemic is put under effective control, the domestic macroeconomy is improving all along. The domestic refined petroleum product market, the demand is recovering and which is basically returned to the pre-pandemic level. Now, the natural gas market in China is also registered fast growth.
The company sees opportunity of the macroeconomic recovery, the improvement of oil and gas, demand and international oil prices, taking initiative to follow the target of carbon peak and carbon neutrality and energy transition, which has focused on the high quality development, remain committed to the five development strategies of innovation, resources, markets, internationalization, green and low carbon, coordinate our efforts in COVID-19 response, production, operation, quality and efficiency improvements, innovation and reform, as well as ESG. We have continued our efforts in fund management to enhance our efforts in cost and risk control and maintain stable operation and production. Our operation performance has saw significant increase and maintaining a sound momentum. The fourth business segment remains profitable.
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According to IFRS, in the first three quarters of 2021, PetroChina's revenue RMB 1.88 trillion, up 31.8% year-on-year. Operating profit RMB 124.763 billion, up 107%. Net profit attributable to the parent RMB 75.126 billion, at average two-year growth of 42%. Basic earnings per share CNY 0.411, a large increase.
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In the third quarter, PetroChina's revenue RMB 683.76 billion, up 37.5% year-on-year. The operating profit RMB 36.3 billion, adjusted for the proceeds from pipeline transactions last year, up 77% year-on-year. Net profit attributable to the parent RMB 22.089 billion, adjusted for the pipeline transactions, up 174.4%. Earnings per share CNY 0.121 .
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For exploration and production business segment. For our domestic business, we have pushed forward efficient exploration and profitable development. We stay committed to the low cost development strategy, fully leverage our advantage in resources, maintain a fast growth of natural gas production, and take orderly steps to promote our new energy business. For overseas business, we have focused on the COVID-19 prevention control on an ongoing basis and actively promote the key projects, production and operations. In the first three quarters of 2021, PetroChina's crude production 660 million barrels, including 560 million barrels in China, up 0.3%. Marketable natural gas production 3.3 TCF, including 3.1 TCF in China, increased by 7.9% year- on- year. The oil and gas production 1.21 BOE, including 1.08 BOE in China, up 3.8%.
Breaking cost $11.36 per barrel, up 4.5% adjusted for exchange rates. In the first three quarters, operating profits for E&P segment RMB 58.369 billion, up 191.8%, or increased by RMB 38.369 billion.
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In Q3, the company's crude production 220 million barrels, including 190 in domestic China, down by 0.3% year-on-year. Marketable natural gas production 1 TCF, including 977.1 billion cu f t in China, up 10.7%. Oil output 390 million barrels of oil equivalent, including 350 in China, up 4.5%. In third quarter, the OP of E&P segment RMB 27.499 billion, up 185%.
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For refining and chemicals business, we work hard to control the refined products and increase the production of chemicals. We continue to lower the yields of gasoline and diesel, and adjust the diesel gasoline ratio in a flexible manner. We have maintained high utilization for key chemical facilities, including gasoline facilities, and successfully put into operation the ethane to ethylene projects in Chongqing and Tarim. We further enhanced cost management control, and with our unit processing costs continuing to drop down. In the first three quarters of 2021, the total crude, 910 million barrels, up 3.9%. The refined petroleum products, 81.32 million tons, up 1.4%, including gasoline up by 10% and kerosene up by 28%. Diesel down by 11.0% year-on-year.
Chemical commodities 22.695 million tons, up 5.5%. The production of ethylene, 4.756 million tons, up 0.9%. In the first three quarters, the operating profit for R&C segment, RMB 31.99 billion, up RMB 33.658 billion, including RMB 20.133 billion in the refining business, up by RMB 28.403 billion. For chemical business, the operating profit RMB 11.857 billion, up 79.6%, the best for the same period of this year.
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In third quarter, the company processed 310 million barrels of crude, down by 1.1% year-on-year, and we produced 26.42 million tons of refined petroleum products, down by 6%. Chemical commodities 7.97 million tons, up by 4% year-on-year. Gasoline output 1.7 million tons, up 6.3%. In third quarter, the operating profit for refining and chemical segment RMB 9.805 billion, up 10.5%. Breaking down, for refining business operating profit is RMB 6.67 billion, up 24.2%. For chemicals business, OP is RMB 3.128 billion, down by 10.6%.
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For our marketing business, we continue to enhance marketing and optimize the international trading business. We actively innovate the non-oil business operation and explore the building of integrated energy service platform, providing services including oil, gas, hydrogen, electricity and non-oil business. We have successfully put into operation the first integrated energy service station in China. In the first three quarters, PetroChina has sold 120 million tons of refined petroleum products, up 2.5%, including 84.1 million tons of fuel in China, up 8.1%. For gasoline, diesel and kerosene, which registered a year-over-year growth of 10.4%, 1.5%, and 36%. In the first three quarters, operating profits for marketing segment RMB 8.776 billion, up RMB 31.3712 billion.
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In third quarter, PetroChina has sold 43.3 million tons of refined petroleum products, down by 1.6%, including 40.5 million tons in China, up 4.3%. In third quarter, our marketing segment registered an operating profit of RMB 2.136 billion, down by 73.2%. For natural gas and pipeline business, in light of the realities that China has witnessed a solid demand for natural gas in off season and a robust demand in peak season, PetroChina has seized this opportunity and further expanded the market with the sales of natural gas saw a significant increase, providing clean and low carbon energy for the low carbon transition. We continue to optimize the structure of the gas sources and try to bring down the purchase costs.
In the first three quarters of 2021, PetroChina has sold 198.7 BCM of natural gas, up 14.4% year-on-year, including 139.1 BCM in China, up 16.2%. In the first three quarters, the operating profit for natural gas and pipeline business segment is RMB 26.715 billion. Adjusting for the proceeds from pipeline transaction in this year and last year, the OP was up by 55.1%. In third quarter, PetroChina's natural gas sales, 64.6 BCM, up 19.9%, including 41.9 BCM of domestic natural gas sales, up 12.8%. In third quarter, due to higher imported natural gas costs, the business segment suffered a loss of RMB 173 million.
Adjusted for the proceeds from last year's pipeline transaction, our loss was cut by RMB 2.312 billion. In this table, you can see the target of 2021 and our progress for your reference. In the first three quarters, PetroChina has recorded a great operation performance. This is attributable to the fast recovery of China's economy and the rising of market demand, as well as the unrelenting efforts made by all the staff of PetroChina.
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The company will remain committed to the five development strategies of innovation, resources, markets, internationalization, green and low carbon, and further develop oil and gas as well as new energy business to develop refining, marketing and new material business in an efficient manner. Continue to increase our supply of green, low carbon and affordable energy. Continue to improve the company's operation efficiency, market competitiveness and value creation capability so that we could create much, much value to the shareholders. Thank you all.
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Now the floor is open for questions.
[Non-English content] Now is the Q&A session. If you have any questions, please press star one on the phone and wait for your name to be announced. Thank you. [Non-English content] The first question comes from Miss Kelly Liu of Morgan Stanley. Thank you.
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With Morgan Stanley, congratulations for the company's third quarter results. I've got three questions. First, my first question is about upstream production. We have witnessed a quarter-over-quarter decline for the company's upstream production, especially for natural gas. What's the reasons behind that? And what's your outlook for the Q3 production? Given that in Q3 it is the big season for natural gas consumption. My second question is about imported natural gas loss. What's the imported number for the third quarter? And could you please break it down? For example, what's the operating profit for the pipeline business for your investment in the pipeline business and Kunlun Energy? The third one is about PetroChina downstream business segment compared with the second quarter. In third quarter the refining business has seen an increase in operating profit. For chemicals and marketing business we saw a quarter-over-quarter decline. How do you look at it?
Would you like to give some details on that?
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Mr. Xiao Xiuwen from China Department is answering your first question. For the production decline in third quarter, actually this is a quite normal thing, because in the second and third quarter, it is the off season for the consumption. In the second and third quarter, this is also a time for natural gas processing plants and other facilities to carry out turnarounds and maintenance to prepare for the winter gas supply. Therefore, we have witnessed some decline in the third quarter.
Mr. Wei Fang added that the decline of production in the third quarter compared with the second one is mainly from our overseas business, not mainly because of OPEC's production cut compliance and our service contracts. For PetroChina's domestic production, actually our crude production is flat compared with the second one. For natural gas business, our production is up by 7.7%, a large increase compared with our plan in the beginning of the year. We will make every effort to maintain the supply of natural gas.
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Mr. Wei Qingbo from PetroChina's finance department will answer your second and third questions. Actually, there are a lot of reasons behind the imported natural gas loss. In the first three quarters, natural gas and pipeline business segments have seized the opportunity of robust demand for natural gas in China, further expand our market and optimize our marketing structure. We work hard to explore more direct supply and direct sales customers and continue to enhance the marketing segment, marketing network in end user markets, further improve the service to our customers, and work hard to expand our sales and efficiency. Actually, we have witnessed a significant increase for natural gas sales with operating profits RMB 39.715 billion, down 36.4%.
This is also impacted partly by the pipeline transactions. Last year, the pipeline transactions proceeds RMB 45.7 billion, and this year the Kunlun pipeline asset restructuring RMB 16.98 billion. Adjusted for the proceeds from pipeline transactions, actually we have saw a 55.1% increase.
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In the third quarter, the business segment suffered a loss of RMB 173 million, and adjusted for the pipeline transactions, there is a CNY 260 million quarter-over-quarter decline. That's mainly because that we have witnessed a higher procurement cost for importing natural gas. As you may also know that there is a nine-month timeline for the price of our importing natural gas. Last year, as international oil prices continued to increase, therefore, the cost is also going up.
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In the first nine months of 2021, we suffered a RMB 3 billion loss in importing natural gas. As I also just mentioned, that's mainly because of our higher costs. Actually, on a year-on-year basis, our loss is declining. For the fourth quarter, driven by increasing international oil prices, there will be higher importing natural gas costs. China will continue to enhance the supply side management to procure the resources in an orderly manner and try to control the average procurement costs and continue to explore the high-end and efficient markets. In the meanwhile, we will also make full use of national policy to bring down our imported natural gas loss.
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In your third question, as you rightly pointed out, our refining business saw profits up. For chemicals and marketing business, there is a quarter-over-quarter decline. The first reason is a lower gross margin, especially for the chemical products. In the second quarter, the gross margin for chemical products is RMB 377 a ton, and for the third quarter, the number is RMB 360. For marketing business segments, there are also lots of reasons behind that. One reason is that we have faced more fierce competition. In the first two months of the third quarter, there has been some large changes in the market and also compounded by the re-emergence of some COVID-19 cases. The sales volume has been gentler. Due to that, the price-to-place ratio was brought down, which leads to a lower gross margin.
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Next question, please.
[Non-English content] The next question come from Mr. Neil Beveridge from Bernstein. Thank you.
Thank you very much. You know, just some more questions on the gas situation in China. You know, can you provide guidance for how big the losses are likely to be in the fourth quarter? That's my first question. The second question is, what do you think is your ability to pass the higher LNG prices that we're seeing at the moment, pass those costs on to customers? With the winter gas premium and with sales above you know, contracted volumes where, you know, I think, you know, pricing, you know, is commercially negotiated between buyer and seller. The third question is really around the gas production volumes. You've seen a very strong year this year with 10% growth.
I think over the long term, medium to long term, you guide to 5% gas growth. Do you think it's likely that PetroChina can increase the domestic gas production and sustain a higher rate of growth going forward, to minimize gas import losses? Thank you.
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Mr. Chai Shouping, CFO, is answering your question. Regarding the imported natural gas loss, as Mr. Wei Qingbo just mentioned, that's mainly because of higher costs, and we have suffered a loss starting from the second quarter. In the third quarter, the loss is RMB 6.4 billion. For, you know, first three quarters, to combine the second and the third, the total loss is RMB 3.2 billion. As you pointed out that there is a high price for LNG, which is $20-$30 per MMBtu. For PetroChina, most of our contracts is long-term contracts, and we will sell them at a pre-determined price. For the spot cargo, we will control the purchase of spot cargos. For those that are within the contracts, we will sell at a contract price.
For those volume outside the contracts, we will pass through the costs. As you also mentioned that we will further enhance the domestic natural gas production ramp-up. In the first three quarters, the natural gas production output registered a double-digit growth, which is 10% higher than our expected target, 5%. Increasing the domestic natural gas production is an effective way to lower down our imported natural gas loss. This year, we have slightly allocated more CapEx to natural gas production in China to increase the natural gas production. For domestic natural gas, we will further develop this kind of business as it is a strategy for PetroChina and also of a lever to promote green and low-carbon transition. In the future, the company will further promote the effective development of natural gas production in light of the market and resources. Thank you.
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Due to time constraint, last question please.
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The next question comes from Mr. Lawrence from BOCI. Thank you.
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With BOCI, I have got two questions. First, for the company's refining business in the third quarter, we have saw a quarter-over-quarter increase which is outperforming your peers. What's the reason behind that? The second question is about the company's new ethylene project. How cost competitive are these projects? And how much natural gas will the project cost for the company?
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Mr. Wei Qingbo from PetroChina's finance department is answering your first question regarding the refining business improvement compared with Sinopec, which registered a quarter-over-quarter 29% decline. We actually do not do much study into that as the statistics has just come out. From PetroChina's perspective, for refining and chemicals business, we continue to be market oriented and put profitability at the center, continue to improve the production and operation, and further control the production of refined products, will increase the production of chemicals and further enhance the cost control.
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Another reason is that for PetroChina, for refining business, our sales volume has shown a significant increase, including gasoline, kerosene and diesel.
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For our refining business segment, due to the increase of sales, our work in progress inventory has shown a significant decline. According to our knowledge, and for Sinopec, in the third quarter, many of its refineries were under maintenance. This might be a reason behind the decline of operating profits. Thank you.
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Mr. Chai Shouping, CFO, is answering your second question. Third quarter, PetroChina has put two ethane-ethylene projects online, including one 800,000 tons capacity in Chongqing and one 600,000 tons capacity in Tarim. The two projects are all based on PetroChina's own technologies.
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The two products is now in smooth operation with around 9%-11% return on investment within our expectation. This is an effective measure for the company to further reduce the refined products or increase the chemical products.