PetroChina Co., operator of the country’s largest pipeline network, will sell assets valued at 39 billion yuan ($6.3 billion) as the government continues with steps to open state-owned enterprises to private investment.
The company will transfer to a separate unit assets including the First and Second West-East Gas Pipelines, which carry natural gas from central Asian countries and China’s energy-rich region of Xinjiang to the nation’s eastern cities, according to a statement to the Hong Kong stock exchange yesterday. PetroChina will then sell the unit, PetroChina Eastern Pipelines Co., by public tender on an equity exchange.
President Xi Jinping is pushing the most aggressive moves in more than a decade to increase market forces in the economy. The sale is the first step after Chairman Zhou Jiping said in March PetroChina is considering opening up areas including pipelines, oil and gas exploration and refining to private investment.
This sale “confirms a shift in strategy and marks a further step in SOE reform, which is positive for Chinese oil majors,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein, wrote in a note to clients yesterday. “Divestment will help PetroChina improve returns and is consistent with the mixed ownership model promoted by President Xi Jinping.”
China Petroleum & Chemical Corp., Asia’s biggest refiner known as Sinopec, plans to sell a 30 percent state in its retail unit, which includes the nation’s biggest network of fuel stations, in a deal that could raise as much as $30 billion. State-controlled Aluminum Corp. of China Ltd. is also seeking partnerships with private companies.
PetroChina rose 0.6 percent to HK$8.99 in Hong Kong yesterday. The shares have gained 5.8 percent this year, compared with a 4.5 percent decline in the city’s benchmark Hang Seng Index.