PetroChina to Sell its Stakes in the Trans-Asia Pipeline
China’s biggest oil and gas producer PetroChina Co. is planning to sell its half a stake in its subsidiary Trans-Asia Pipeline for 15.5 billion to strengthen their balance sheet amid the weak oil and gas prices. The divestment which is already approved by the board is expecting to speed up the government’s reform of the energy sector as they look to spin off State owned oil and gas pipelines in an independent business. The stake will be sold to a unit of the Beijing based China Reform Holdings Corp. a State owned asset management company.
PetroChina profit has decrease 81 percent or to 5.2 billion in the first three quarters of this year, the lowest since 2007. PetroChina parent company the China National Petroluem Corporation still controls 80 percent of the country’s natural gas pipeline network and storage system. Although the company is being pressured to hit profit targets that were set by the government, as falling oil prices gave profits to other energy companies. Petro China gains the cash flow through this deal, but what the company really wants is to adjust and reorganization of upcoming reforms in which the government split off the oil and gas pipelines.
The move will also help spread the CNPC risk as the Trans-Asia gas pipeline that involves overseas interests as well. The pipeline starts at Turkmen-Uzbek border city of Gedaim and passes through central Uzbekistan and southern Kazakstan before it reaches Horgos in the Xinjiang Uygur autonomous region.
A spate filing done to the Shanghai Stock Exchange also revealed that PetroChina agreed to merge its subsidiaries Kunlun Energy Co. and PetroChina Kunlun Gas Co. PetroChina which owns 58 percent of Kunlun Energy is hoping that the acquisition will assist in the focus on liquefied natural gas distribution and to further restructure the business.