PetroChina Denies Report of Possible Plan to Purchase China Gas Holdings

PetroChina Co., the nation’s biggest energy producer, denied a report by a news service owned by the Financial Times that the company is considering buying Hong Kong-listed China Gas Holdings Ltd. (384)

“We’ve no plan to buy a listed gas company in the foreseeable future,” Mao Zefeng, a Beijing-based spokesman for PetroChina, said in a telephone interview, when asked if the energy producer may acquire China Gas.

PetroChina is working with Bank of America Merril Lynch on a possible purchase of China Gas and may use its gas unit Kunlun Energy Co. to buy the company should it push ahead with a bid, dealReporter reported, citing unidentified people familiar with the matter. The report is wrong, Eric Leung, joint managing director at China Gas, said by phone, declining to elaborate.

China Gas shares pared gains after rising as much as 11 percent to HK$3.93 today, the highest since Dec. 2. The stock was up 6.8 percent at the midday break. The gas supplier said in a statement released during the recess that it hasn’t received any bid from PetroChina.

In addition to its piped-gas business, China Gas operates 102 gas filling stations for vehicles and 44 liquefied petroleum gas distribution projects. PetroChina’s parent China National Petroleum Corp. owns a 4.8 percent stake in China Gas, data compiled by Bloomberg show.

CNPC isn’t planning to buy China Gas, Liu Weijiang, a Beijing-based spokesman at the state-controlled energy producer, said by phone, when asked if the company was considering a bid.

PetroChina fell 0.3 percent to HK$12.18, while Kunlun Energy gained 3.6 percent to HK$13.70. The benchmark Hang Seng Index advanced 0.6 percent. Patrick Lau, secretary of Kunlun Energy, couldn’t be reached by telephone for comment.

Police Probe

China Gas slumped to the lowest in more than a year in Hong Kong in February after dismissing its former managing director, who was arrested by police for suspected embezzlement.

Managing Director Liu Ming Hui and Executive President Huang Yong were detained by the Shenzhen Public Security Bureau on Dec. 18 for suspected “embezzlement of the assets of an organization in which they have duties,” China Gas said Jan. 25.

The police probe may focus on the acquisition of five gas projects in Hubei province in 2004, Leung said on Jan. 31. In the worst-case scenario, this may lead to the company having to write off assets worth HK$178 million ($23 million), Leung said.

China Gas is rated a “buy” by nine out of 20 analysts surveyed by Bloomberg. Five recommend holding the stock.

To contact the reporter on this story: John Duce in Hong Kong at Jduce1@bloomberg.net

To contact the editor responsible for this story: Amit Prakash at aprakash1@bloomberg.net.

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