Sinopec Approves PetroChina-Style Pipeline Sale to Raise Fundsby
Sinopec will hold 50% stake in the pipeline unit after sale
PetroChina sold half of its Trans-Asia pipeline in December
China Petroleum & Chemical Corp., the world’s biggest refiner, approved a plan to sell as much as 50 percent of a pipeline asset, following a similar move last year by state-owned rival PetroChina Co.
The Beijing-based company, known as Sinopec, will use unit Sinopec Sichuan-to-East China Gas Pipeline Co. “as a platform to introduce capital publicly,” it said in a statement to the Hong Kong stock exchange Tuesday, without providing a value for the sale or further information. Sinopec will hold 50 percent equity interest in the unit after the sale, it said in the statement.
The state-owned company plans to tap new discoveries to double annual natural gas output to 40 billion cubic meters by 2020, Chairman Wang Yupu said in March. It plans to build pipelines and storage sites in southwest China’s Sichuan province and in provinces along the Yangtze river as part of network to provide gas to urban areas. PetroChina last November sold a 50 percent stake in the Trans-Asia Gas Pipeline Co. to a unit of China Reform Holdings Corp. for $2.4 billion.
The sale is another indication that China has set aside a plan to spin off pipeline assets of its major companies to create an independent pipeline entity. PetroChina’s state-owned parent China National Petroleum Corp. decided to invest in a major pipeline on that understanding in June.
Sinopec started operating its Sichuan to eastern China gas pipeline that links to the Puguang gas field in 2010. It can transport as much as 12 billion cubic meters of the fuel annually. The company invested 63 billion yuan ($9.4 billion) to build the 2,170 kilometer (1,348 mile) pipeline, according to the state-controlled People’s Daily.
The refiner’s state-owned parent China Petrochemical Corp. received an approval in October to build a 8,400 kilometer pipeline network to connect gas fields in northwest China to southern and eastern provinces.