PetroChina Co yesterday reported a forecast-beating 7.8 percent increase in third-quarter earnings as higher crude oil prices offset refining losses, while rival Sinopec, Asia's largest refiner, posted a 3 percent rise in the same period.

PetroChina's quarterly net profit of 37.4 billion yuan (US$5.9 billion) beat the average forecast of 34.1 billion yuan by five analysts polled by Reuters. Revenue jumped 46 percent to 530.7 billion yuan.

Sinopec's net profit in the July-September quarter gained 3 percent to 20.2 billion yuan, the company said yesterday.

PetroChina makes the bulk of its sales from crude sales while Sinopec's business comes from refining and fuel sales.

China's fuel consumption growth slowed in the quarter when its gross domestic product grew the least in two years. Also, the increase in domestic fuel prices has lagged that in global crude oil prices this year as the government battled inflation, leaving the domestic refining sector in the red.

The government cut fuel prices by more than 3 percent this month, the first reduction this year after raising them in April and February. The cut will further squeeze the profit margin of the two companies' refining business.

"Depressed refining margins in China have triggered worse-than-expected diesel shortages this month, implying bigger downstream losses for PetroChina and Sinopec in the fourth quarter," said Gordon Kwan, head of regional energy research at Mirae Asset Securities.

The situation has forced Sinopec to seek opportunities in the upstream sector overseas, especially in unconventional resources like shale gas.

PetroChina last week said it may make a 50 billion yuan refining loss for 2011 if current fuel prices stay.