The Shanghai initial public offering (IPO) of PetroChina, the nation's largest oil producer, was approved by the China Securities Regulatory Commission (CSRC) on Monday.
Analysts say PetroChina's return to the domestic stock market would help maintain the stability of Chinese capital market and boost the growth of China's petroleum industry.
Shares of PetroChina Co rose by 10 percent, the highest in more than four months, to a record HK$14.3 at Monday's close on the Hong Kong exchange.
The oil giant will sell up to 4 billion yuan-denominated A shares in the IPO to raise 37.77 billion yuan (US$4.97 billion), according to the company's prospectus filed to the CSRC.
The IPO would offer more choice for Chinese investors and narrow the gap between stocks demand and supply, said Wang Jing, an analyst with Orient Securities Co Ltd, adding the offering would allow domestic investors to benefit from the company's fast growth.
According to the company's prospectus, it will use 6.84 billion yuan and 5.93 billion yuan respectively to boost production capacity at its Changqing and Daqing oil fields. A total of 1.5 billion yuan will be used to build production facilities at Jidong field, the country's biggest.
It also plans to invest 17.5 billion yuan in upgrading its Dushanzi oil refinery and ethylene facilities and 6 billion yuan in expanding an ethylene plant in Daqing, in northeast China.
Daqing, one of China's largest oil fields, produced more than 43 million tons of crude oil last year, accounting for almost 25 percent of the nation's total. Changqing produced more than 10.5 million tons of oil in 2006.
Jidong Nanpu Oilfield, the largest oil discovery by PetroChina in four decades, will have an annual output of 10 million tons by 2012, according to the company's plan.
"The oil fields that PetroChina is putting money into will be China's major oil sources in the future," said Han Xuegong, an oil expert.
China will be able to produce enough refined oil to meet domestic demand after the completion of more than 20 refining projects of at least 10 million tons by 2010, according to the nation's medium and long-term plan for the oil refining industry.
Experts said the soaring oil prices in the international market may drive up PetroChina's offering prices.
Citic Securities Co, UBS Securities Co, and China International Capital Corp are arranging the share issue.
PetroChina began trading in Hong Kong and its American Depository Receipts were listed on the New York Stock Exchange in 2000.
(Xinhua News Agency September 25, 2007)
