The newly formed PipeChina - formally China Oil and Gas Pipeline Network - a state owned energy pipeline company, has announced a deal to take over oil and gas pipelines from PetroChina and Sinopec for cash and equity valued at $56 billion.
(Image via Unsplash)
PipeChina was created in December to consolidate pipeline assets from the country’s three state-owned oil and gas companies, as part of Beijing’s reforms intended to incentivise domestic exploration and production.
The company will take on the pipelines, storage facilities and natural gas receiving terminals operated by China National Petroleum Corp, China Petroleum and Chemical corp and China National Offshore Oil Company. The finances gained will be used to pay dividends and for capital expenditure.
“The [sale] enables the company to focus on projects with higher returns, while enabling the Yulin-Jinan Pipeline to fully utilise its transmission capacity and realise better value,” Kantons, a subsidiary of China Petroleum & Chemical (Sinopec), said in a filing to Hong Kong’s bourse late on Tuesday.
“The [deal] details provide positive read across for PetroChina and [sister firm] Kunlun Energy,” said Neil Beveridge, senior analyst at Sanford Bernstein.
“The pipeline [restructuring] is the most significant reform of the Chinese oil and gas industry since the IPO of the Chinese oil majors 20 years ago.”
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