PetroChina
Company Limited announced Friday that it will acquire overseas
assets from its parent, China National Petroleum Corporation (CNPC), China's largest
oil producer, for 20.74125 billion yuan (US$2.5 billion).
It is a bid for PetroChina to boost its reserves portfolio,
promote overseas business development and enhance corporate value
in a long run, said Chen Geng, Chairman of PetroChina.
According to the agreement, the acquisition will allow
PetroChina to own 50 percent interest in Newco, a subsidiary of
CNPC, by cash injection. It will give PetroChina access of
Newco'soil and gas assets in 10 foreign countries including
Kazakhstan, Venezuela, Algeria, Peru, Oman, Azerbaijan, Canada,
Ecuador, Nigerand Chad.
To streamline its existing overseas businesses with the planned
acquisition, PetroChina also agreed to transfer the entire issued
share capital of its wholly-owned subsidiary PetroChina
International Ltd. to the Newco for 579.355 million yuan (US$69.97
billion).
After the deal, PetroChina International, mainly engaging in oil
and gas exploration and production in Indonesia, will become a
wholly-owned subsidiary of Newco.
China National Oil and Gas Exploration and Development
Corporation (CNODC) and Central Asia Petroleum Company Limited
(Central Asia) now own 95 percent and 5 percent interest in the
Newco, respectively.
Upon completion of the acquisition by PetroChina, CNODC will
acquire the 5 percent interest in the Newco from Central Asia.
Newco will be owned half to half by PetroChina and CNODC,
respectively, in the end while PetroChina will pay the total
consideration to the Newco.
PetroChina believes the two transactions will provide an
opportunity to increase its oil and gas reserves and production,
and provide a new platform for the growth of its overseas business.
The transactions will also improve the Company's financial
performance and optimize shareholders' value in the long term and
the Newco will benefit from stronger financial support from
PetroChina.
After the acquisition, PetroChina will be enabled to diversify
its overseas exploration by tapping into Central Asia, South
America, Middle East and Africa, which have abundant oil and gas
resources, and increase substantially its overseas net proven
reserves and production.
According to PetroChina, upon the completion of the
transactions, the company's consolidated international reserves
will total 866 million barrels of oil equivalent, an increase of
879 percent from the current 88.5 million barrels of oil
equivalent. Its total oil and gas reserves will increase 4.31
percent and total oil and gas production will rise 5.41
percent.
The two transactions represent a milestone in PetroChina's
efforts to become a large international energy company, said Chen
Geng.
With this strategic platform and sizable overseas portfolios,
PetroChina will turn its domestic businesses into global operations
by increasing overseas reserves and production, he said.
Chen added that PetroChina will also benefit from improved
operating efficiencies by sharing management expertise with Newco
in overseas business development.
The assets acquisition by PetroChina is expected to be completed
by the end of 2005, while the transfer of PetroChina International
to Newco is expected to be completed by the end of February
2006.
PetroChina was born in 1999 from the CNPC during the regrouping
move of the largest oil producer of China. PetroChina got most
capital and debts of CNPC in four sectors including exploration and
production, refinery and sales, chemical products and natural
gas.
PetroChina was listed in the New York Stock Exchange and Hong
Kong Stock Exchange, LTD. in April 2000.
(Xinhua News Agency June 11, 2005)