Auditor Says CNPC Accounting Error Understated 2012 ProfitAibing Guo
China National Petroleum Corp., the country’s biggest oil and gas producer, underreported 2012 profit by 603 million yuan ($97 million) because of accounting errors, China’s state auditor said today.
A review of CNPC’s 2012 financial results found company units miscalculated natural gas sales income, the National Audit Office said in a statement posted on its website today. CNPC failed to develop a natural gas project in Sichuan on time after receiving government approval and built a 2.1 billion yuan gas storage project in northeast China’s Liaohe Oilfield in 2011 without permission, according to the statement.
“We find through our auditing that CNPC has problems in areas such as operations and internal management, and some managers may have violated laws and regulations,” the auditor said in the statement. “We have submitted our findings on violations to related departments for further investigation.”
The report is the latest blow to CNPC, which faced an anti-corruption investigation across the group last year. Former CNPC Chairman Jiang Jiemin and at least six other high-ranking officials at the company and its listed units PetroChina Co. and Kunlun Energy Co. are being investigated for corruption-related charges.
Qu Guangxue, a Beijing-based spokesman for CNPC, didn’t answer two calls to his office phone seeking comment.
No Big Impact
CNPC and PetroChina have corrected most of the problems mentioned in the statement, and people responsible for such problems will be held accountable, PetroChina said in a statement to the Shanghai Stock Exchange today.
The problems identified by the auditor ’’have no big impact to the company’s operations and financial records,’’ PetroChina said, without mentioning detailed projects.
In Sichuan, PetroChina formed a joint venture to develop natural gas in 2007 and failed to start commercial production as promised in 2009, according to the auditor’s statement. PetroChina hadn’t finished the project as of last June, the auditor’s report said.
A CNPC unit in Jilin province lost 152 million yuan between 1999 and 2011 by giving loans without approval and the explorer’s financial arm, Bank of Kunlun Co., risks losing 570 million yuan on money lent to an external trading company in Xinjiang.
PetroChina shares gained 0.4 percent to HK$9.71 in Hong Kong, compared with a 0.1 percent gain in the city’s benchmark Hang Seng Index.
The audit office also issued statements on 10 other state-owned companies including China Resources Holdings Co., which has businesses ranging from energy to real estate. The company had severe law and discipline violations in 2012, the auditor said.
Former China Resources Chairman Song Lin was probed for “suspected disciplinary violations,” the China Communist Party’s Central Commission for Discipline Inspection said in a statement on its website on April 17.
China Resources has corrected most of the problems mentioned in the auditor’s report by the end of May, and is working to build some long-term mechanism to ensure similar problems won’t happen again, the company said in a statement on its website today.