PetroChina, the world's most valuable oil and gas producer, said it plans to pump up its refining capacity by two-thirds by 2017, banking on fuel pricing reforms at home to improve its finances as it bids to become a major global refiner.

PetroChina, China's No 2 refiner after Sinopec, is aiming to raise its annual refining capacity to 200 million tonnes per year within seven to eight years, in its bid for 40 per cent of its home market, president Zhou Jiping has said.

He added the company needs such capacity to be more like its global rivals such as ExxonMobil, BP and Royal Dutch Shell.

'PetroChina's largest contribution to profits comes from our upstream business,' Zhou said. 'Comparing our major metrics to ExxonMobil and BP, our disadvantages lie in the ratio and structure of our value chain.'

PetroChina is also looking for overseas mergers and acquisitions in the downstream business, Zhou said.

Zhou made his comments as PetroChina posted its best profit in three quarters yesterday, as higher fuel prices in China offset the steep slide in crude oil prices.

PetroChina grappled with an environment of falling crude prices in the first half, with prices halving from a year ago, prompting international oil majors, including Exxon and Royal Dutch Shell, to cut costs and lower investments.

'We are seeing a number of uncertain factors in front of us,' Zhou said.

'We aim to have stricter control over investments and do our best to reduce costs.'

Zhou said PetroChina aims to reduce lifting costs by 5 per cent compared to last year and reduce non-operating expenses by 10 per cent. It is participating in the second round of bidding to develop one of Iraq's oilfields, Zhou said.

PetroChina's net profit was 31.5 billion yuan ($4.62 billion) in April-June, compared with a restated 25.14 billion yuan in the same quarter last year and against a consensus forecast of 30.1 billion yuan from five analysts polled by Reuters.