PetroChina seeks more deals in Australia

Oil and gas giant hopes to boost presence on top of US$3.7b investments

PUBLISHED : Tuesday, 12 March, 2013, 12:00am
UPDATED : Tuesday, 12 March, 2013, 4:44am

PetroChina, the mainland's biggest oil and gas producer, is looking to make more deals in Australia, adding to about US$3.7 billion in acquisitions as part of a global drive to feed surging Chinese demand.

"As one of the key markets in our Asia and Pacific operations, PetroChina is willing to expand our presence in Australia when a good opportunity arises," said Mao Zefeng, a Beijing-based spokesman for PetroChina.

PetroChina, planning to invest at least US$60 billion this decade in global oil and natural gas assets, agreed to pay BHP Billiton US$1.63 billion in December for a stake in the proposed Browse liquefied natural gas venture in Western Australia.

China's overseas oil and gas acquisitions reached a record last year after the government said it would boost funding for energy investment to secure long-term supply.

"There will be more [mergers and acquisitions] to come as Chinese companies look to secure long-term resources positions to meet future LNG demand," said Neil Beveridge, an analyst at Sanford C. Bernstein. "China remains confident in further long-term expansion in Australia."

Shares in PetroChina have lost 5.2 per cent in the past 12 months, compared with a 9.8 per cent gain in the Hang Seng Index.

With seven LNG developments at a cost of US$190 billion under construction, Australia is set to surpass Qatar as the world's largest LNG supplier by the end of the decade. Global oil and gas companies are also seeking to tap Australia's shale gas resources, ranked as the sixth-biggest potential reserves in the world.

PetroChina, the publicly traded unit of China National Petroleum Corporation, last month agreed to buy a 20 per cent stake in the Poseidon natural gas discovery off the northwest coast of Australia and a 29 per cent interest in the Goldwyer shale project in the onshore Canning Basin from ConocoPhillips.

"This is all about a longer-term game," said Adrian Wood, an analyst at Macquarie. "When we run our numbers, China looks pretty well supplied with gas until 2020. It's the resources that are important to them, not the production right now."

Rival Chinese companies also are buying up in Australia. China Petrochemical Corporation is a partner in the LNG development on Queensland's Curtis Island being built by ConocoPhillips and Origin Energy, while China National Offshore Oil Corporation agreed last year to pay US$1.93 billion to increase its stake in BG Group's LNG project.

PetroChina last year acquired Melbourne-based Molopo Energy's coal-bed methane holdings in Queensland state for A$43.4 million (HK$344.4 million). It plans to supply the gas to Liquefied Natural Gas Ltd's proposed Fisherman's Landing export venture.

The transaction with BHP to buy part of Woodside Petroleum's Browse project is expected to be completed in the first half of this year.