An employee at a PetroChina Co Ltd gas station in Nanjing, capital of Jiangsu province, alters oil prices.
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PetroChina (NYSE:PTR) says it plans to sell a 50% stake in a pipeline company for as much as 15.5B yuan ($2.4B), as parent company China National Petroleum seeks to complete asset sales before year-end to meet government-set annual profit goals.
The divestment, already approved by its board, is also expected to speed up the government’s reform of the energy sector, as it looks to spin off State-owned oil and gas pipelines into independent businesses.
The stake is being sold to a unit of the Beijing-based China Reform Holdings Corp, a State-owned asset management company.
PetroChina closed down 0.11 per cent in Shanghai today despite the announcement, but added 0.35 per cent in Hong Kong.
The sale includes part of a critical network of pipelines which link China’s far west Xinjiang region to major natural-gas supplies in Central Asia.
Due to the global oil price drop, PetroChina saw its net profit for the first nine months slump by 68.1 percent to 30.60 billion yuan from a year earlier.
“PetroChina will gain cash flow through the deal, but what the company really wants is further adjustment and reorganization from upcoming reforms”.
PetroChina’s Trans-Asia Gas Pipeline has pipelines connecting China with countries, including Kazakhstan, Uzbekistan, Tajikistan and Kyrgyzstan.
An integration plan with Kunlun Energy Company (0135) has also been approved.
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Kunlun Energy, which is 58.33% owned by PetroChina, expects the acquisition to help focus on LNG distribution, expand its business.
