PetroChina says new pipeline assets will optimize business
Updated: 2009-06-20 07:14
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HONG KONG: PetroChina Co, the country's biggest oil producer, said the pipeline assets to be acquired from its parent for 9.7 billion yuan ($1.4 billion) will complement the unit's businesses.
China National Petroleum Corp's pipelines are already profitable, Mao Zefeng, PetroChina's Hong Kong-based spokesman, said in an e-mail yesterday. The assets will "optimize" PetroChina's existing business structure, he said.
The assets to be acquired from China National include one crude oil pipeline and one refined oil link, each spanning 1,858 kilometers (1,154 miles) west to east from Urumqi, Xinjiang to Lanzhou, Gansu, PetroChina said in a statement. More oil will be produced in northwestern China and Kazakh imports will increase, according to Mao.
PetroChina can save costs by buying the pipelines as the company currently pays the parent a fee for using those facilities, Gordon Kwan, the head of energy research at Mirae Asset Securities Ltd, said in an e-mail.
The crude oil pipeline and the fuel link have designed annual capacities of 20 million metric tons and 10 million tons, respectively. Oil will be delivered to processing centers and markets by pipeline, Mao said.
PetroChina stock has advanced 27 percent in Hong Kong this year, outperforming a 25 percent gain in the benchmark Hang Seng Index. The stock rose 0.36 percent to close at HK$8.48 on Friday.
PetroChina won shareholders approval on May 12 to sell as much as 100 billion yuan of bonds to fund exploration, pipeline and overseas projects. Chairman Jiang Jiemin told the annual general meeting that the company plans to spend 233 billion yuan this year to buy and upgrade assets.
The Chinese company last month agreed to pay $1 billion for a 45.5 percent stake in refiner Singapore Petroleum Co, expanding in the island-state, which is Asia's biggest oil-trading center.
Bloomberg News
(HK Edition 06/20/2009 page5)