Dow Jones Business News
NEWS SNAP: BP To Sell Petrochina Stake For Around $1.6B
Monday January 12, 7:03 am ET
By Mark Long, Of DOW JONES NEWSWIRES
LONDON (Dow Jones)--BP PLC Monday said it intends to sell its 2% stake in Chinese oil and gas producer Petrochina into
public markets, which analysts say could bring in around $1.6 billion to the U.K. oil major.
Analysts said BP's sale makes strategic sense
as the company bought into Petrochina largely
to gain contacts in the world's fastest-growing
energy market, a task seen as accomplished,
with a tidy profit to boot.
In addition, there is little opportunity to break in
and take a dominant interest in China's
upstream sector, such as BP did in Russia with
its nearly $8 billion TNK-BP deal.
BP currently has just one upstream asset in
China, the Yacheng-13 gas field in the South
China Sea.
"BP is active in less countries (than its rivals),
and where it is active it very much pursues the
strategy of being one of the main players," said
Robert Plummer, an analyst with energy
consultants Wood Mackenzie, in Edinburgh.
BP paid $578 million for its Petrochina stake
when the Chinese company launched its initial
public offering of 10% of its shares in April
2000.
Investors were pleased with BP's move, sending
its shares up 2% to 443 pence by 1138 GMT.
BP's shares have also been nudged upward as investors flee the bloodbath of Royal Dutch/Shell (NYSE:RD - News) Group
(RD, SC), which Friday stunned markets by revealing it overbooked its proved oil and gas reserves by one fifth.
Since listing, Petrochina's share price has more than tripled, with the bulk of these gains in the past year, on strong oil prices
and a tidal wave of interest in Chinese equities.
China is the world's sixth-biggest producer of oil, with daily output of around 3.3 million barrels. Three companies - Petrochina,
CNOOC Ltd. (NYSE:CEO - News) and China Petroleum & Chemical Corp. (NYSE:SNP - News), or Sinopec - dominate domestic
oil and gas production.
More importantly, the most populous nation on the globe is now the second- biggest petroleum consumer, surpassing Japan
last year.
BP's sale of its Petrochina stake is by no means a signal it - the world's second-biggest publicly traded oil producer - is
moving out of the country, the company and analysts said.
A spokesman for BP pointed to a planned $3 billion investment in China over the next five years.
Key projects include a joint venture with CNOOC and others in a $600 million liquefied natural gas import facility in Guangdong
province, retail joint ventures with Sinopec and Petrochina and a number of petrochemical projects.
Gas import schemes feature heavily in BP's plans, with LNG sales from the Tangguh plant in Indonesia eyed and with gas
imports from the massive Kovytka field in Siberia planned for the more distant future, analysts said.
A spokesman for BP said the cash earned from the stake's sale would be treated as "normal cash receipts," with a number of
possible uses, including incremental investment in current projects, debt reduction and a possible renewal of a share buyback
program, which was suspended in the middle of last year. |
