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Hong Kong-listed Brightoil Petroleum (Holdings) Ltd has announced that interim gross profit and net profit attributable to its shareholders increased by 7.8% and 63.8% to HK$1.13 billion (US$ 145.7 million) and HK$965.2 million (US$124.5 million), respectively, for the six months ended 31 December 2011.

Revenue surged 189.8% to HK$36.26 billion. Basic earnings per share were HK14.27 cents, up 62.3% compared to the prior-year period.

Commenting on the results, Dr. SIT Kwong Lam, Chairman & CEO of the Group, said, “In the first half of the fiscal year 2012, we witnessed significant long-term business growth with progressive development in the upstream business. We have completed the acquisition of the Xinjiang Tarim Basin Dina 1 Gas Field, which commenced production in January 2012. This marks a milestone in enhancing our market presence in the oil and gas development and production business. Upon the commencement of operations of Tuzi Field project in the near future, we believe that the upstream business will become an important source of income to the Group.”

International Supply and Bunkering (ISB)

During the review period, the revenue and sales volume of its ISB division surged by 190% and 97% to HK$36.1 billion and 660 million tonnes respectively.

Brightoil says it has been enhancing its competitiveness at strategic ports. After adding New Orleans to the list of ports where it supplies bunker fuel, the group also reactivated its delivery service in Rotterdam and continued to build a strong presence in Singapore, Tanjung Pelepas, Hong Kong, as well as the Chinese ports of Shenzhen, Shanghai, Ningbo and Zhoushan. Singapore and China are the key strategic ports to the group’s bunkering business. In 2011, the Maritime and Port Authority of Singapore (MPA) ranked Brightoil as the second largest bunker fuel supplier by volume, leaping from 34th in 2010.

"The group’s competitiveness is underpinned by its ability to source competitive products and, as market opportunities emerge, to profit from arbitrage shipments between the West and the East. The group successfully completed its first arbitrage cargoes from the US Gulf Coast during the period under review, delivering fuel oil to the Chinese and Singaporean markets. Its global footprint and trading capabilities in Houston and Singapore in particular have enabled these shipments to be commercially viable and attractive, and have further boosted the group’s supply capabilities in its ambitious bunkering business," Brightoil said.

Oil Storage & Terminal Facilities

With the aim of becoming an integrated energy conglomerate, Brightoil has been focusing its investments on strategic oil storage assets, which are expected to bring steady returns and optimize storage services and other core businesses, including bunkering.

Brightoil is building a major import and transshipment facility on Waidiao Island in Zhoushan, Zhejiang Province. The total capacity of the storage facility will reach 3.2 million cubic metres. On Changxing Island in Dalian, the group is constructing one of the largest storage infrastructure hubs in the world. Construction of Phase 1 of the terminal has commenced during the period under review.

In 2011, a number of safety-related incidents occurred across the Chinese oil industry, resulting in the review and revision of safety requirements for storage terminals. As a result, Brightoil has changed the design standards of its oil storage infrastructure to meet the new regulations, which have led to a consequential impact on the schedule for the approval and construction of oil storage and terminal facilities. The development of the two projects is still in progress. The commissioning of Phase 1 of the Zhoushan project is estimated to start in early 2013, with commercial operations slated to begin by mid-2013, while the Dalian project is slated to begin commercial operations in the second half of 2013.

Marine Transportation

Brightoil is engaged in an ongoing process to establish a fleet of ocean-going oil tankers in order to optimize its supply chain. Following the delivery of four Aframax vessels from 2009 to 2010, the group purchased five additional VLCCs in August 2010.

The construction of the vessels is said to be progressing as scheduled, with delivery of the first vessel slated for July 2012. Upon delivery of all five vessels by the first half of 2013, Brightoil's marine fleet will have a total capacity that exceeds 2,000,000 DWT, which will be able to carry approximately 20 million metric tonne of oil each year.

To further enhance operational efficiency, Brightoil has also set up a fully integrated shipping division to handle all shipping activities in-house or through outsourcing. The shipping division is expected to reduce operating costs throughout the year.

Upstream Business

The Overall Development Plan (ODP) of Brightoil’s Tuzi Gas Field project (Tuzi Field) in Xinjiang, which covers drilling, completions, facilities, road access, etc., is pending approval. The project’s environmental impact assessment and water and soil conservation, occupational health and safety, and land use plans have been reviewed by the relevant government authorities. Final approval is expected to be granted during the first half of 2012.

On 11 November 2011, Brightoil announced the acquisition of the rights to develop and produce natural gas at the Dina 1 Gas Field, which is located adjacent to the Tuzi Field in Xinjiang’s Tarim Basin. The group signed a Production Sharing Contract (PSC) of the Dina 1 Gas Field with China National Petroleum Corporation (CNPC) in 2008. Pursuant to the contract, Brightoil and CNPC recovered paid costs and shared profit in proportion to the respective investments of each company, with 49% going to Brightoil.

The Dina 1 Gas Field has commenced commercial production and, according to Brightoil, can be developed together with the Tuzi Field in order to create economies of scale and cost savings.

“Looking forward, we will diversify our revenue streams to sustain our growth momentum while optimizing our existing resources and the solid foundations of our core businesses. We believe that these efforts will significantly increase our market recognition and competitiveness, which is in line with our goal of becoming one of the leading global energy conglomerates in the world, and will in turn create the utmost value for our shareholders.” Dr. Sit concluded.