Oct. 29 (Bloomberg) -- PetroChina Co., the world's second- largest company by market value, will raise 66.8 billion yuan ($8.9 billion) in the biggest share sale this year to expand refining capacity by more than half and raise oil production.

PetroChina, issuing shares in Shanghai after listing in Hong Kong in 2000, will sell 4 billion shares at 16.7 yuan apiece, according to a statement today. That is the top end of the range offered. Investors applied for $441 billion of stock, two people with direct knowledge of the transaction said, asking not to be identified before an official announcement.

Chinese investors, undeterred by the world's highest valuations, are rushing to buy into a stock market that's almost tripled this year. Warren Buffett, whose Berkshire Hathaway Inc. completed the sale of its 2.3 billion shares in PetroChina this month, said last week people should be cautious about buying Chinese stocks. He'd made an 11-fold return since 2003.

``The record-high subscription is not a surprise to me given that oil prices will likely blow past $100 like a hot knife through butter this winter,'' said Gordon Kwan, head of China energy research at CLSA Ltd. in Hong Kong.

Oil climbed above $93 a barrel for the first time in New York Mercantile Exchange trading today, extending this month's gain to 16 percent. Crude was at $92.64 a barrel at 1:19 p.m. New York time.

Shares Gain

PetroChina shares rose 3.2 percent today to a record close of HK$19.62 in Hong Kong. The stock has surged 78 percent this year, more than the 58 percent advance in the city's benchmark Hang Seng Index. The index rose 1,181.68, or 3.9 percent, to 31,586.90 at the close in Hong Kong.

Demand for PetroChina's Shanghai shares exceeded the 2.66 trillion yuan China Shenhua Energy Co. attracted in what had been the nation's most subscribed share offer. Shenhua, China's biggest coal producer, raised 66.6 billion yuan last month.

PetroChina plans to spend about 200 billion yuan annually in the next three years to expand, Chai Shouping, deputy manager of the oil producer's finance department, said Oct. 25.

PetroChina said in March that capital spending may jump 25 percent to 185.7 billion yuan this year. That is higher than Exxon Mobil Corp., Royal Dutch Shell Plc and BP Plc, the world's three largest oil companies by sales.

China's largest oil producer has been adding new reserves at an average annual rate of 5 percent for the past three years, a faster pace than Exxon, Shell and BP.

Refinery Expansion

PetroChina plans to increase its oil refining capacity by 52 percent to 170 million metric tons by 2010, Yang Xin, chief accountant for refining and sales, said Oct. 25.

Berkshire Hathaway has sold its entire stake in PetroChina, Buffett said in an interview on Fox Business Network Oct. 18. Berkshire was PetroChina's biggest shareholder after state-owned China National Petroleum Corp., with more than 2.3 billion shares as of the end of last year.

Berkshire bought its stake for less than HK$1.70 a share in April 2003. Activists have urged Buffett and other investors to divest from PetroChina because of its links to Sudan, whose government the U.S. accuses of supporting genocide. The decision to sell was ``100 percent'' based on PetroChina's share price, Buffett said.

UBS AG's China venture, UBS Securities Co., Citic Securities Co. and China International Capital Corp. are arranging PetroChina's share sale.

PetroChina will start trading in Shanghai Nov. 5, the oil producer said Oct. 21.

To contact the reporters on this story: Ying Lou in Hong Kong at ylou1@bloomberg.net; Bei Hu in Hong Kong at bhu5@bloomberg.net.

Last Updated: October 29, 2007 13:33 EDT