PetroChina steps up overseas race

PetroChina plans to spend at least $60 billion (R443bn) in the next decade on overseas acquisitions, challenging Exxon Mobil and BP in the race to control oil and gas fields.
Source:Bloomberg Beijing     Time:30 Mar 2010
PetroChina plans to spend at least $60 billion (R443bn) in the next decade on overseas acquisitions, challenging Exxon Mobil and BP in the race to control oil and gas fields.

"Ten years ago, PetroChina was a state-owned oil company, but now we have a goal of becoming an international, integrated energy company," Jiang Jiemin, the chairman of the world's largest company by market value, said last week.

PetroChina has spent almost $7bn in the last year to buy refineries and reserves in Australia, Canada, Singapore and central Asia. The expansion pits PetroChina against Exxon, which agreed to pay about $30bn for US gas producer XTO Energy in December.

"Every five, 10 years or so, you'll get the occasional $30bn deal, but this is at least $6bn every year and that's significant for any major oil company," said Neil Beveridge, an analyst at Sanford C Bernstein in Hong Kong. "This puts PetroChina on par or exceeding some international oil majors in spending."

Exxon is counting on gas to provide the bulk of its future growth with the acquisition of XTO Energy, as well as new developments from the South Pacific to the Celtic Sea. BP, vying with Royal Dutch Shell as Europe's biggest oil company, paid at least $8.3bn to acquire assets over the past 12 months.


PetroChina teamed up with Shell last week to buy Australian gas producer Arrow Energy for $3.2bn.

Spending by Chinese companies on mining and energy acquisitions reached a record $32bn last year. China Petroleum & Chemical, or Sinopec, said yesterday it would pay $2.5bn to purchase a stake in an Angolan oilfield.

"A total investment of not less than $60bn is needed to form our five regions of global oil and gas co-operation, by 2020," Jiang said.

PetroChina has spent between $2bn and $3bn annually in the past five years, so the planned investment "is clearly a step up", Beveridge said.

The shares snapped a five-day losing streak in Hong Kong yesterday, rising 1.6 percent to HK$8.89 (R8.45).

Longer-term investors are betting on PetroChina's success, driving the shares up 43 percent in the last year.
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