PetroChina to sell pipeline assets
Print Edition
PETROCHINA Co, China’s largest oil and gas producer, plans to sell its gas pipeline assets in a multibillion-dollar deal to restructure its portfolio and boost returns.
The move marks a further step in the reform of state-owned enterprises as the government encourages a bigger role for the private sector in the economy. Rival Sinopec Corp earlier announced a plan to divest 30 percent of its fuel-marketing business to the private sector.
PetroChina said late on Monday that it will establish a subsidiary called PetroChina Eastern Pipelines Co that will hold assets from China’s first and second west-to-east cross-country pipelines, before selling the unit by public tender.
The assets were valued at 29 billion yuan (US$4.66 billion) or 39 billion yuan, based on two separate audits, PetroChina said. “The equity transfer will help the company develop the mixed-ownership model, optimize resource allocation, and diversify the ownership structure of the company,” it said.
Bernstein analyst Neil Beveridge said the divestment gain could be over 10 billion yuan, or 0.05 yuan per share, short of his earlier estimates of 25 billion yuan, or 0.12 yuan a share. “We believe that Sinopec’s decision to restructure their fuel-marketing business is more significant,” he said.
And with rules on third-party pipeline access in place, he added, pipeline ownership is less strategic to PetroChina than in the past.
Bank of America Merrill Lynch analysts said demand for the pipelines, which bring gas from Central Asia to China’s eastern coast, could be high and PetroChina is likely to retain half of the assets.
The pipelines are near the end of a major capital expenditure cycle and come at a time when investment returns are improving because of gas price reform and lower gas import costs.
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