PetroChina (PTR) is making headlines with a record first half, but its stock price relative to peers like Exxon Mobil (XOM) simply doesn’t make it a clear buy right now – though it is not particularly expensive either.

Though specific figures have not been released, PetroChina Company [[PTR]] has recorded a record operating profit for the first half of 2009 according to its parent company.

China National Petroleum Corporation (CNPC), the parent company of PetroChina, released a statement on its website stating that PetroChina’s record results were fueled by its refining business. This is a dramatic and promising shift for PetroChina – and other domestic oil and gas companies in China – moving forward as refining has generally been a money-losing proposition in the past.

The People’s Republic of China tightly controls the price of diesel and gasoline in the country, often forcing companies like PetroChina to refine fuel at a loss to keep the price low for consumers. For instance, even during the record oil prices of last summer PetroChina’s refining operations were losing money.

This year, however, China’s government has raised diesel and gasoline prices by more than 15% – providing breathing room for refiners like PetroChina to profit from their refining operations.

How long this “fuel policy reform” will last in China is anyone’s guess – there is speculation among many analysts that inflationary concerns resulting from the huge flood of money provided by China’s economic stimulus (the money supply in China is expanding at three-times the rate of the U.S. money supply) will lead the government to cut fuel prices in an effort, however feeble, to reign-in inflation.

Barring a long-term policy shift that allows PetroChina to consistently cash-in on refining operations at exemplary levels, even with record first half results the stock isn’t attractively prices compared to its peers.

PetroChina’s estimated Forward Price-to-Earnings (P/E) Ratio is 10.05 and Price-to-Earnings-to-Growth (PEG) Ratio over the next 5 years is 3.08. Compared to Exxon Mobil Corp. [[XOM]], with a Forward P/E of 10.92 and a PEG of 3.01, the stock is trading at par. For the “Major Integrated Oil and Gas” Industry as a whole, however, PetroChina is expensive: the average PEG in the industry is only 2.47

Certainly PetroChina could offer explosive growth if its investment spree pays off – the company has recently invested in Nippon Oil Corp.’s Osaka refinery, bought a major stake in Singapore Petroleum Co. for $1 billion, is negotiating with Ecuador to secure crude oil purchases, and is seeking its first foray into Europe through an investment in a refinery in Scotland. And this is not near a complete catalog of recent developments.

Nonetheless, right now there are simply too many stocks on sale for PetroChina, at its current valuation, to be a clear buy.

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