The Bank of China (BOC) will provide 20 billion yuan (US$2.41 billion) of credit to PetroChina Co., Ltd. to support the long-term development of the oil giant.
BOC Vice-President Hua Qingshan and PetroChina Chief Financial Officer Wang Guoliang signed the agreement Thursday in Beijing.
The credit is the largest of its kind given in China, said Huang Yan, president of PetroChina.
The credit line is a loan pledged by a bank to a customer.
The BOC credit line is expected to help PetroChina's credit demands, said Liu Mingkang, chairman and president of BOC.
"BOC is striving to provide all-round and high-quality financial services, covering wholesale, retail, capital settlement and investment banking to help PetroChina fulfil its future development goal," Liu said.
Industry insiders believe that thanks to the credit guarantee, BOC will be able to get involved in PetroChina's investment banking businesses.
The Hong Kong-based Bank of China Intl Holding Ltd, BOC's merchant banking subsidiary, launched its Beijing office in June.
It is eager to participate in domestic businesses, especially underwriting home firms to help them get listed overseas, insiders said.
According to Liu, BOC and the country's oil sector had co-operated well over the last two decades.
As early as the late 1970s and early 1980s, BOC transferred Japanese energy loans to the country's on-shore oil industry to promote crude exploration and development.
Up to date, BOC has provided US$6.5 billion in loans to PetroChina's subsidiaries by transferring foreign government loans and international commercial credit and also giving its own foreign exchange loans.
BOC recently helped PetroChina to pay back 230 billion yen (US$2.14 billion) of Japanese energy loans. This should reduce PetroChina's financial cost.
Huang Yan said PetroChina's business performance had improved a great deal in the first half of this year. Its share price has also risen by more than 45 per cent since its debut on the Hong Kong and New York stock exchanges early in April.
PetroChina is aiming for 60 billion yuan (US$7.23 billion) in profits in 2000.
With total assets of 411.3 billion yuan (US$49.55 billion), the company is the fourth largest oil giant in the world.
(www.21dnn.com)
