China's oil giants hit hard by oil slump

Plunging global crude oil prices crimped 2015 earnings for China's trio of oil companies, according to their annual reports.

China National Offshore Oil Corporation (CNOOC), China's largest offshore oil and natural gas developer, made 20.2 billion yuan (3.1 billion U.S. dollars) in net profits last year, plunging 66.4 percent year on year.

Net profits of PetroChina Co. Ltd., China's top oil and gas producer, shrank 66.9 percent to 35.52 billion yuan in 2015, the lowest profit since 1999.

Sinopec, China's largest oil refiner, saw its net profits decline 30 percent year on year to 32.4 billion yuan in 2015.

The continued slump in global crude oil prices, downward pressure on the domestic economy and sluggish demand for oil and gas have caused the profit plunge for the oil giants, said Dong Xiucheng, professor with China University of Petroleum.

Brent crude, the benchmark for more than half the world's oil, plunged 48 percent last year, forcing producers and drillers from the U.S. to Asia to slash spending and cut staff.

Meanwhile, China's economy, the world's second largest, grew 6.9 percent last year, the lowest in a quarter of a century.

To cope with the sagging oil prices and subdued economic growth, these oil companies need to further cut costs and optimize assets, said Dong.

PetroChina chairman Wang Yilin said that the company had taken proactive measures to cope with the plunge in oil prices and emphasized cost reduction and efficiency improvement.

The company will continue to streamline its sales strategies by focusing on prioritized regions and high-margin products, shutting down oil and gas fields that have no hope of making profits, said Wang.