Chinese trader Brightoil Petroleum Thursday reported net profit of HK$544.9 million ($70.3 million) for the six months ending December 2013, on the back of significant improvement in its trading and bunkering businesses.

This compared with a HK$871.2 million net loss during the same period in 2012, the company said when it released its interim results.

Cost reduction measures and an improvement in its shipping business also contributed to the rebound in earnings, the Hong Kong-listed company said.

Total revenue jumped 71% year on year to HK$40.3 billion over July to December 2013, with its international trading and bunkering division posting operating profit of HK$480.6 million, compared with a HK$791.1 million loss during the same period in 2012. EXPANDING CRUDE TRADING

"The ITB [international trading and bunkering] business unit focused its efforts mainly on building its crude trading relationships across Asia and its trading volumes into China/North Asia," Brightoil said, adding that it successfully renewed its crude supply arrangement with China's major oil companies for another year and focused on growing sales volumes across Asia.

In addition, it sought continued cost reductions by extending its tankage subleasing program to Singapore and sped up efforts to close offices overseas.

It will look into extending its crude supply sources to South America and continue focusing on moving more volumes to North Asia going forward, the company said.

The company said its total bunker sales for the July-December 2013 period fell 26% year on year, but rose 18% compared with the first half of 2013. It did not give actual volumes.

Brightoil noted that while several shipping companies had begun to post profits since the second half of 2013, recovery in the shipping sector is only likely to materialize by end-2014 or 2015.

Looking forward, it will continue focusing on China, where it hopes to expand its bunkering presence in more ports.

The company also narrowed its loss in marine transportation from HK$34 million in the second half of 2012 to HK$6.8 million over the same period last year. Its five VLCCs were fully utilized during the latter half of 2013, mainly to transport cargoes to China, including for third-party charterers.

In addition, demand for its fleet of four Aframaxes showed steady improvement during the review period, Brightoil said. They were deployed in a mix of short-term time charters, serving strategic customers in the spot market and for its own fuel oil trades.

This year it will begin operating a new service in Singapore with its Brightoil 688 bunker barge, which will be fitted with a mass flow metering system. CHINA STORAGE PROJECTS PROGRESSING

Elsewhere in China, Brightoil is constructing the first phase of the 3.15-million-cubic-meter oil storage facility on Waidiao Island in Zhoushan, and operations are expected to start late this year or the first half of 2015. Phase 2 operations, comprising 1.22 million cu m of capacity, are slated for late 2015 to H1 2016.

In Dalian in the north, Brightoil said the review process of its Changxing oil storage project, with planned total capacity of 7.19 million cu m, will be extended due to design revisions by the Chinese government. Land preparations have been completed and approval for the first phase, comprising 3.51 million cu m of storage, is expected by the end of 2015. The entire project is scheduled to be completed by the end of the following year.

In the upstream segment, Brightoil's natural gas business operations in China recorded a profit of HK$81.9 million during the second half of 2013, slipping 16.4% year on year.

The Dina 1 gas project in western Xinjiang province is currently producing 1 million cu m/day of gas and 63 mt/day of condensate and new wells are being planned to increase output, the company said.

Brightoil started production from the Tuzi Luoke gas field, also in Xinjiang, in December. Both projects are expected to produce up to 1.5 billion cu m/year of gas and 35,000 mt/year of condensate, Brightoil said.

Earlier this week, Brightoil had announced a $1.08 billion acquisition of stakes in two offshore China producing blocks from US company Anadarko Petroleum. The transaction is pending completion.