Pipe plans: at PetroChina
PetroChina tempts investors
PetroChina whetted investors' appetites ahead of its Chinese stock market listing next month by saying today that it would soon have news on a big gas discovery and it had an eye open for acquisitions.
But the company also unveiled a massive bill for its planned cross-China pipeline, the country's second west-east gas link, which will need total investment of $13.6 billion.
PetroChina expects to raise up to 66.8 billion yuan ($8.93 billion) when four billion shares hit the Shanghai stock exchange on 5 November. It held an online question and answer session for Chinese investors to put questions to senior executives.
Chief financial officer Zhou Mingchun said the company was considering overseas acquisitions, both upstream exploration and production and downstream refining and marketing.
"The focus is on the upstream but we'll also consider buying other assets, including downstream projects. We will evaluate target projects based on our strategic needs and the investment return," Reuters quoted him as saying.
But Jiang Lixin, assistant secretary of the board, later said there were no current plans to make acquisitions in the next year.
The company plans to keep annual capital expenditure at around 200 billion yuan for the next few years.
More than half the proceeds from PetroChina's initial public offering of shares in Shanghai is already earmarked for five projects, including developing oil fields, upgrading technology and expanding ethylene production capacity.
PetroChina shares have surged recently, a move analysts claim owed much to speculation in the Chinese media about a potential new discovery in the Tarim basin in Xinjiang region in western China.
Zhou said the company hoped to announce something soon.
"It's the company's major strategic area for increasing oil and gas reserves. Actually there's a lot of opportunities. We believe that once we have done more work in this area, in the near future we will have a satisfactory answer for everybody."
Xinjiang will also be the start point of a new gas pipeline running across China to two major economic zones. It will connect with Central Asian gas sources in the west and run eastwards to the Yangtze river delta, with a southern branch heading to the Pearl river delta in the south.
Zhang Yaoming, chief accountant of the company's gas and pipeline division, said the pipeline would cover 8000 kilometres and require total investment of 102 billion yuan ($13.63 billion).
"We are now conducting a feasibility study which will be submitted by the end of this year to the government in Beijing. Construction is expected to start next year and completion will be around 2010," said
"It will use mainly domestic gas but be supplemented from Central Asian sources."
The planned link from Xinjiang, which would be China's second east-west pipeline, would add 30 billion cubic metres per year, equivalent to 60% of the country's current gas consumption.
PetroChina's parent, China National Petroleum Corporation, struck a deal with Turkmenistan in August for 30 Bcm of deliveries but had not put a price on construction of the pipeline.