China Petroleum and Chemical Corp. (Sinopec) on Tuesday started
issuing bonds totaling 20 billion yuan (US$2.67 billion) to finance
the construction of a 2,800 kilometer natural gas pipeline running
from southwestern Sichuan Province to Shanghai.
All the 20 billion yuan, along with Sinopec's initial investment
of 25.07 billion yuan, will be injected into the 63 billion yuan
project. The pipeline began construction in August. It is expected
to provide Shanghai with 1.9 billion cubic meters of gas annually
upon completion in 2010, the company said.
However, no details were given regarding how the company would
raise the remaining 18 billion yuan.
The bonds will be issued at a par value of 100 yuan each
exclusively for domestic institutional investors within the next
three days, Sinopec said in a statement posted on its Website.
The issue breaks down into two types: 8.5 billion yuan will be
issued with a term of five years and an annual interest rate of 5.4
percent, and 11.5 billion yuan will be issued with a term of 10
years and an interest rate of 5.68 percent.
The oil giant is also planning to issue 30 billion yuan in
convertible bonds with warrants entitling the purchase of its
shares. Some of the proceeds from the convertible bonds will be
channeled into the project, the company said earlier this year.
The project includes the development of the Puguang gas field in
Sichuan, the source of the pipeline and one of China's five largest
gas fields, with proven reserves of 356 billion cubic meters as of
the end of last year.
As Shanghai's demand for natural gas soars, China's top oil and
gas producers have all looked at the eastern business hub as a
major market.
China's first West-East gas pipeline, which was built by China
National Petroleum Corp. and went into use in 2004, carries 1.2
billion cubic meters of gas annually to Shanghai from Xinjiang.
Its capacity is expected to reach 1.7 billion cubic meters next
year.
China National Offshore Oil Corp. is also annually transporting
600 million cubic meters of gas to Shanghai from Pinghu, a gas
field in the East China Sea.
Although China's natural gas output is expected to reach 94
billion cubic meters in 2010 from last year's 58.6 billion cubic
meters, the country still needs imports to fill a gap of 16 billion
cubic meters annually.
(Xinhua News Agency November 14, 2007)
