PetroChina shares rise on pipeline sales plans

By Du Juan (China Daily) Updated: 2014-05-14 07:21

A PetroChina logo is seen at its gas station in Beijing August 29, 2013 file photo. [Photo/Agencies]

PetroChina Co said it will sell pipeline assets, a move to further reform State-owned Chinese enterprises and usher market forces into the world's second-largest economy, analysts said.

The government is also fighting high-level corruption.

PetroChina, the country's biggest pipeline network operator, said on Monday its First and Second West-East Gas Pipelines will be transferred to a new subsidiary, PetroChina Eastern Pipelines Co.

PetroChina to sell pipeline business to accelerate mixed-ownership

PetroChina gets stake in Exxon Mobil field

All assets of PetroChina Eastern Pipelines - worth 82 billion yuan ($13.1 billion) - will then be sold by public tender on an assets exchange on the Chinese mainland. The subsidiary will be established in China's commercial hub in Shanghai, PetroChina said. Its network delivers natural gas to China's eastern cities from central Asia and the Xinjiang Uygur autonomous region.

The company's shares rose. PetroChina closed up 0.79 percent at 7.65 yuan in Shanghai and finished 2.78 percent higher at HK$9.24 ($1.19) in Hong Kong on Tuesday.

The move is in accordance with the central government's natural gas industry reform plan of separating the pipeline business from oil and gas companies, Wang Ruiqi, senior analyst with the energy information consultancy ICIS C1 Energy, said.

"The government is trying to cut down size of the giants by spinning off their assets in order to weaken the chain of corruption," she said.

PetroChina owns about 70 percent of the country's crude pipelines and up to 90 percent of the natural gas pipelines.

The National Energy Administration published a document in February that said operators of oil and gas pipelines should open their facilities to third parties in the market and create fair industry development.