PetroChina’s net profit dropped 22% year-on-year in 2008, but the oil giant managed to retain its position as the most profitable company on the Hong Kong stock exchange, the South China Morning Post reported. The company posted earnings of US$16.75 billion, down from US$21.48 billion in 2007, its first decline since 2001. Zhou Jiping, PetroChina’s vice chairman, said the company was facing severe challenges due to the economic downturn. The fourth quarter of 2008 was particularly difficult, with profit falling 33% year-on-year to US$3.98 billion. Full-year earnings were also hit by a US$5.95 billion increase in taxes paid on oil revenue. The tax is imposed whenever oil prices rise above US$40 a barrel, and PetroChina’s average selling price was US$87.55 in 2008. The company plans to cut costs this year, but capital spending will remain at the 2008 level of US$34 billion. The secnd and third most profitable companies on the Hong Kong exchange last year were China Mobile and Industrial and Commercial Bank of China, with earnings of US$16.5 billion and US$16.23 billion respectively.