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Sinopec sells pipeline interest

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World Pipelines,

According to Bloomberg, the Wall Street Journal and ejinsight, the state-owned China Petroleum & Chemical Corp. (known as Sinopec) is set to raise 22.8 billion yuan (US$3.3 billion) capital through the sale of a 50% stake in a pipeline unit to investors including China Life Insurance. The company reportedly seeks to use more cleaner-burning natural gas and extend its natural gas business.

According to the Wall Street Journal, Sinopec plans to sell the 50% stake in its Sichuan to East China gas pipeline to two other state-owned companies as part of a reform. China Life is set to pay 20 billion yuan for a 43.86% stake, with the remaining 6.14% being divided.

Sinopec’s shares gained 0.9% to HK$5.62 in Hong Kong this morning (13 December).

“There is a shortage of pipeline capacity and gas storage facilities in China, so the government is encouraging more investment in those sectors,” Tian Miao, an analyst at North Square Blue Oak Ltd., said. “This is part of broader efforts by authorities to diversify investment into cash-intensive infrastructure projects.”

Sinopec’s capital injection by is just one of the government’s steps to improve the performance of China’s oil and gas sector by widening its use of natural gas. The country’s gas demand may rise to as high as 350 billion m3 by 2020, according to the National Energy Administration, up from 193.2 billion last year.

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