PetroChina eyes assets after setting record gain
PetroChina, looking for more growth after recording the largest annual profit from normal operations by a Hong Kong-listed company, will buy into its parent's overseas assets 'in the not-too-distant future', chairman Chen Geng said yesterday.
The mainland's largest oil and gas producer will consider either paying cash to buy the overseas assets from China National Petroleum Corp (CNPC) or swapping assets with it.
'I can't tell you what assets and how much money will be involved or what format it will take, as we need to value the assets first,' Mr Chen said, adding it would have to fulfil listing rules in New York and Hong Kong.
'The potential proposals are being studied but I expect some results in the not-too-distant future,' he said in his first public comment on an overseas push.
PetroChina, which operates in the domestic market only, has seen output grow by single-digit percentages since listing in 2000. To speed growth, it is seeking to expand overseas, including acquiring assets owned by CNPC.
The company yesterday reported a 47.85 per cent rise in net profit to 102.92 billion yuan for last year, surpassing the $92.22 billion posted by HSBC Holdings.
It is shy of the net profit of $117.34 billion recorded by Hutchison Whampoa in 1999, after the conglomerate booked a huge windfall from the sale of its interest in British mobile-phone company Orange.
Mr Chen did not respond when asked whether the asset reshuffling would include its parent's assets in politically sensitive areas such as Sudan.
When PetroChina was listed in Hong Kong and New York, United States labour and human rights groups urged investors to shun its share offering, partly due to its links in Sudan, which had been slapped with sanctions by the US.
CNPC has interests of between 40 per cent and 90 per cent in three joint oil and gas exploration and production projects in the war-torn African country, where it also has stakes in refinery and chemical projects.
The company, whose direct operating assets are predominantly overseas, has upstream and downstream oil and gas projects in 18 countries.
Overseas oil production attributable to CNPC amounted to 12.88 million tonnes in 2003, compared with PetroChina's output in the same year of 104.87 million tonnes - all produced on the mainland.
Daiwa Securities analyst Rachel Tsang Wai-ming said it would be tough for PetroChina and CNPC to reach an agreement this year if oil prices remained high, as it would make it difficult for both parties to agree on a price for the reshuffling.
PetroChina aims to raise its oil and gas output 4 per cent this year to 955.3 million barrels of oil equivalent, faster than the 3.2 per cent growth achieved last year. It also plans to increase its crude oil refining volume 6.58 per cent to 747 million barrels.
The firm intends to boost its capital expenditure to 97.5 billion yuan this year from 95.35 billion yuan last year. The bulk of the spending will be on oil and gas exploration and production.
