PetroChina, the nation's biggest oil producer, is in talks with its parent company about buying PetroKazakhstan Inc. assets through a joint venture, the Hong Kong-listed oil company announced on Friday.
The transaction had been widely expected in the market since PetroChina's parent company, China National Petroleum Corp (CNPC), took over PetroKazakhstan for US$4.2 billion earlier this year.
PetroChina has the priority right to buy non-Chinese assets held by state-owned CNPC, it said in a statement to the Hong Kong Stock Exchange yesterday.
"The company (PetroChina) has approached CNODC (China National Oil and Gas Exploration and Development Corp) to discuss the possible acquisition of interests in PetroKazakhstan," PetroChina said. CNODC is a wholly-owned unit of Beijing-based CNPC.
No formal decision, however, has been reached by the board, the statement said.
PetroKazakhstan's headquarters are in Calgary, Canada, but all its operations are in the central Asian republic of Kazakhstan. It produced 150,000 barrels per day last year and has proven and probable reserves of 535 million barrels.
PetroChina has been in strenuous efforts to expand overseas assets to offset its stagnant domestic output.
In June, the oil producer paid US$2.5 billion for its parent company's overseas assets, including oil fields in 10 countries, mostly in Kazakhstan, Peru and Venezuela. PetroChina also formed a 50-50 joint venture, named Newco, with CNPC.
PetroChina would acquire PetroKazakhstan via Newco, which is the firm's overseas acquisition platform.
Industry analysts said although the possible deal would boost PetroChina's production and reserves by only up to 3 percent, it marks an important step to increase its overseas portfolio.
(China Daily December 17, 2005)
