PetroChina news: July 2014

PetroChina is reconsidering a plan to auction off its multi-billion dollar natural gas pipeline unit, and could instead sell it to an affiliate, according to reports.

Selling PetroChina Eastern Pipelines Co Ltd to the affiliate, 50% owned by PetroChina, would enable China's largest energy producer to maintain control over the national gas grid as well as raise cash to fund oil and gas exploration.

However, halting the planned auction would pose a setback to the government's plans to open up the state-dominated energy sector to domestic private investors to improve competition and rein in corruption.

PetroChina controls more than 80% of China's natural gas grid, and some privately owned domestic gas companies have complained this monopoly hurts their business.

"It's almost a done decision to let the joint venture...acquire Eastern Pipelines," said a Beijing-based energy industry executive.

The potential buyer

The potential buyer of Eastern Pipelines is PetroChina United Pipelines Co Ltd – a 50-50 joint venture PetroChina set up last year with a domestic insurance firm and an investment fund that counts numerous non-state institutions among its investors.

Gas pipelines generate the steady, long-term returns favoured by deep-pocketed financial investors such as insurers and funds.

United Pipelines is one of a few local companies with enough capital to buy a huge asset like Eastern Pipelines, one of the sources said. Eastern Pipelines carries an estimated net asset value of between US$ 4.7 billion and US$ 6.3 billion. United Pipelines, which already acquired parts of PetroChina's gas pipeline assets last year, has a total registered capital of 40 billion yuan (US$ 6.46 billion).

Edited from various sources by Elizabeth Corner

Read the article online at: https://www.worldpipelines.com/business-news/25072014/petrochina-news-july-2014/