Highlights:
-  stable recurring profit
-  10% growth in cash flow
-  11% increase in oil production
-  record throughput by refineries
-  6% growth in sales in the Fina network
-  10% improvement in operating profit of Chemical division
-  operations now on a worldwide basis following the buyout of minority interests in Fina Inc.
-  strategic enlargement of Sigma group

PetroFina's consolidated recurring profit for the first six months of 1998 amounted to BEF 10.96 billion, comparable with BEF 11.04 billion (*) for the first half of 1997.

PetroFina's consolidated unaudited profit for the first half of 1998 amounted to BEF 9.71 billion compared to BEF 10.95 billion (*) for the first half of 1997. The results of the first half of 1998 include capital gains of BEF 2.7 billion, arising mainly from the sale of upstream assets in the US and downstream assets in Africa, a write-down of BEF 4.3 billion in the value of stock following a decline in the oil price as well as other non-recurring results of BEF 0.2 billion.

Half year cash flow rose 10% from BEF 28.1 billion (*) in the first half of 1997 to BEF 31 billion. Financial debt at the end of June 1998 was BEF 92.7 billion compared to BEF 95.3 billion a year earlier.

Operating revenues of BEF 352.9 billion were 4% higher than in the first half of 1997.

During the period, the performance of the downstream sector was sustained by higher refining margins in Europe, appreciation of the dollar, excellent operations and growth in sales through the Fina network. However, it was subject to the negative factor of realised inventory losses of BEF 1.7 billion.

In the upstream sector, the negative impact on the results of a 43% fall in the oil price was partially offset by higher production of oil and gas, and the strength of the US gas price.

In the chemicals sector, the buoyancy of monomers in Europe and the recovery in styrenics in the US, compared to a difficult first half in 1997, led to a 10% increase in the recurring profit of the sector in a particularly competitive market.

In July, PetroFina announced the strategic enlargement of its subsidiary Sigma with the merger of its paint operations with those of the Lafarge group. PetroFina will retain about 80% of Sigma while the Lafarge group will acquire around 20% .

The enlarged Sigma group will be one of the three leaders in the decorative paint sector in Europe due to the complementary geographic operations and substantial potential synergies. The agreement should be finalised before the end of 1998.

The merger of PetroFina and its American subsidiary Fina, Inc., became effective on 5 August. This simplifies the Group structure, enabling transatlantic growth to be achieved and the establishment of worldwide production lines.


UPSTREAM
In the first half of 1998, Group production of oil and condensates reached 28.9 million barrels and gas production was 106.5 billion cubic feet, compared to an oil production of 26.1 million barrels and gas production of 106.2 billion cubic feet in the first half of 1997.

In Vietnam, a seventh discovery was made in block 46 in the Gulf of Thailand. The Vietnamese and Malaysian authorities agreed to unitise the Bunga Kekwa field which will enable PetroFina to acquire an interest in this field and participate in its production. This, together with the disposal of a 30% interest in the Group's Vietnamese permits to a Thai partner, brings together the development and commercial plans currently being studied.

In Angola, in deep offshore waters, a new discovery called Rosa, was made in block 17, where PetroFina holds 5%. Within the same block, the development of the Girassol field was approved by the Angolan authorities. Also, during this period, the Group was nominated as operator of block 19, with an interest of 30%. This is also in deep offshore waters.

During the half year, the Group participated in two major onshore discoveries of gas in the US, one in the South of Texas and one in Mississippi, and in a gas discovery in Alberta, Canada.

In Italy, exploration work in the Tempa d’Emma field confirmed the northern extension of the Tempa Rossa field.

DOWNSTREAM
As a result of continuous steps to optimise and improve, the Group refineries processed 690,110 barrels per day, a 4% improvement over the first half of 1997.

In marketing, development and modernising efforts enabled sales of petrol in Europe through the Fina network to increase by over 6% compared to the first half of 1997.

Seeking to concentrate its operations in southern Africa in Angola and in the Democratic Republic of Congo with a primary focus on upstream activities, the Group sold all of its downstream operations in Gabon, Rwanda and Burundi together with 49% of its marketing and distribution operations in the Congo.

CHEMICALS
In May, the Boards of Directors of PetroFina and BASF approved the construction of the largest steam cracker in the world at Fina’s refinery at Port Arthur, This unit, which will produce ethylene and propylene, is a further step in the industrial integration of the Group, and will be operational from the end of the year 2000.

The elimination of a bottleneck during the first half of the year enabled a capacity increase of 50,000 tons per year in the production of ethylene in the olefine plant at Antwerp.
Similar action will be taken in the high density polyethylene plant at Antwerp during the third quarter.

PAINTS
The Sigma group has benefited from its strategic and commercial repositioning and its results have continued to recover, with growth of close to 30% compared to the same period in 1997. All sectors contributed to this improvement. The UK decorative paints operations were sold last March.

The acquisition of Lafarge’s paint operations will enable Sigma to extend its product range with new brand names in Italy, France, Spain and Benelux.
The product range will include the following, among others: Sigma, Histor, Novemail, Gauthier, Elaq, Tollens, Plasdox, Stic B, Max Meyer, Duco, Corti and Texsa.

(*) 1997 figures were restated following US Gaap.