PetroChina to sell pipeline unit

Beijing-based PetroChina said the board has approved a plan to sell 50 percent of its Trans-Asia Gas Pipeline Company to a firm controlled by the investment arm of China Reform Holdings for 15 billion yuan to 15.5 billion yuan (HK$18.8 billion).

In an effort to improve state-owned industries, the China Government is considering spinning off oil and gas pipelines into independent businesses from its energy companies.

China National Petroleum Corporation, PetroChina’s parent, controls 80 percent of the country’s natural gas pipeline network and storage systems.

PetroChina’s third quarter net profit slumped 81.4 per cent year-on-year – albeit still more than $800 million – as China’s economic growth slowed to its worst for more than six years and on the back of tumbling global oil prices.

“PetroChina will gain cash flow through the deal, but what the company really wants is further adjustment and reorganization from upcoming reforms”.

The divestment is a part of PetroChina’s effort to strengthen its balance sheet amid weak oil and gas prices, according to Bloomberg.

The pipeline starts at Turkmen-Uzbek border city of Gedaim and runs through central Uzbekistan and southern Kazakhstan before reaching Horgos in the Xinjiang Uygur autonomous region.

Additionally, the oil and gas producer agreed to transfer its wholly-owned unit PetroChina Kunlun Gas into Kunlun Energy.

Kunlun Energy, of which PetroChina holds a 58.33 percent stake, may acquire the equity interests or assets of PetroChina Kunlun Gas, which is fully owned by PetroChina.