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  • Updated: 4:39pm

PetroChina

As its name suggests, PetroChina Company Ltd is the listed arm of state-owned China National Petroleum Corporation (CNPC). It is China's biggest oil producer, and is listed in Hong Kong, New York, and Shanghai.

BusinessCommodities

US market watchdog likely to ratchet up pressure on PetroChina

US Securities and Exchange Commission has queried deals in Iran, Syria in the past

PUBLISHED : Wednesday, 04 September, 2013, 12:00am
UPDATED : Wednesday, 04 September, 2013, 8:16am

The US Securities and Exchange Commission (SEC) is expected to ask tough questions of PetroChina, after news reports indicated Beijing is investigating the oil company and its parent, the China National Petroleum Corporation (CNPC).

In recent years, the US market watchdog has questioned PetroChina on its financial statements and about more than US$11 billion in deals in countries subject to US government sanctions. PetroChina, listed in Hong Kong and Shanghai, has American depositary receipts traded in New York.

"I expect the SEC to respond to the Chinese investigation by asking PetroChina more questions," said Daniel Roules, a partner at US law firm Squire Sanders.

In a PetroChina filing with the New York Stock Exchange on April 26, signed by company secretary Li Hualin , the company said it had addressed risks related to US sanctions against Iran and Syria. Li is now under investigation by the Chinese government.

In an SEC letter to PetroChina on May 28, 2010, the agency expressed concern that the company had hired Li in 2007 and Li remained a CNPC executive while working for PetroChina.

The SEC also queried PetroChina on the CNPC's projects in Cuba, Iran, Syria and Sudan, "countries identified by the US State Department as state sponsors of terrorism and subject to US economic sanctions". In Cuba, Syria and Iran alone, CNPC had won at least US$11.7 billion in deals, media reports have said.

In an SEC letter of December 4, 2012, to PetroChina, the SEC said it might take "any action with respect to the company".

A lawyer explained this wording meant that the SEC was not ruling out legal action against PetroChina.

In an SEC letter of September 21, 2012, to PetroChina, the agency said the US Public Company Accounting Oversight Board was unable to inspect the auditing of PetroChina, which was a risk to US investors.

The SEC sent a letter dated May 11, 2012, to Jiang Jiemin , then chairman of PetroChina, asking about CNPC's development costs in the Changqing Gas Region, among other things.

Jiang left CNPC on March 18 to be director of the State-owned Assets Supervision and Administration Commission (Sasac), a cabinet agency overseeing large state-owned enterprises. Yesterday, Xinhua said Jiang had been dismissed from Sasac for "serious violation of discipline", code for gross corruption.

Jiang is a protégé of Zhou Yongkang , a former minister of public security and top executive at CNPC, who is also under investigation by the Communist Party.

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