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September 10, 2009

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Home » Business » Energy

CNPC seals bank deal

CHINA National Petroleum Corp yesterday said it has sealed a five-year, US$30 billion loan from a state bank to fund "rapid overseas business expansion."

China Development Bank, one of the nation's policy lenders responsible for raising funds for large infrastructure projects, will provide favorable interest rate on the loan. But CNPC didn't specify the rate or which projects will be financed by the loan.

The agreement underscores China's effort to expand overseas to secure long-term energy supply as it takes advantage of the depressed oil prices and diversifies its foreign exchange reserves.

"This is of great importance for CNPC to speed up its internationalization strategy and safeguard the nation's energy supplies," CNPC President Jiang Jiemin said in a statement.

The bank has also provided financing to CNPC, parent of PetroChina Co, for its oil deals with Russia, projects with Venezuela, acquisitions in Kazakhstan and gas pipeline construction in central Asia.

The loan deal was secured as CNPC dropped a US$466 million takeover bid for Verenex Energy Inc, a Canadian firm which is exploring for oil in Libya, after the North African nation didn't approve the deal.

CNPC has confirmed it canceled the offer, and Verenex said on Tuesday that it is in talks on a possible sale to a Libyan fund.

"While we're somewhat disappointed as Libya offers excellent frontier exploration potential for China, we're also glad that CNPC did exercise good valuation discipline and not be forced to accept harsh government terms just to secure long term deals," Mirae Asset Securities analyst Gordon Kwan said.

Meanwhile, CNPC has reportedly proposed to offer up to US$14.5 billion for a controlling stake in Spanish oil firm Repsol YPF SA's Argentine unit, a deal which would be China's largest overseas takeover, but the Chinese firm has refused to comment.


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