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| PetroChina to Dispose of Stake |
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PetroChina, the nation's top oil producer, is to transfer its stake in an oil trading subsidiary through a connected transaction with its parent firm China National Petroleum Corporation (CNPC). The oil company will transfer 70 percent of its equity interest in China United Oil to CNPC for a cash consideration of approximately 1.01 billion yuan, according to a PetroChina statement to the "The move is part of PetroChina's plans to transfer its non-core business to its parent company. It may be, to some extent, linked to PetroChina's mainland listing plan," said Han Xuegong, a consultant with CNPC. The connected transaction is expected to receive a positive response from the market as it will boost PetroChina's cash flow. According to PetroChina's statement, China United may develop in a direction inconsistent with PetroChina's overall strategy, because PetroChina has no substantial control over it. PetroChina added that it had been gradually transferring its import and export businesses of crude and refined oil to PetroChina International, a wholly owned subsidiary of PetroChina. "By getting rid of non-core businesses, CNPC's listed arm can concentrate on its core business oil and gas exploration and production," said Yin Xiaodong, an oil analyst with CITIC Securities Co. PetroChina said the net proceeds of the disposal would be used to further develop its core businesses. Connected transactions take place between parent companies and their listed arms to strengthen the latter, Yin said. CNPC's Han said China United's profitability could benefit CNPC. Jiang Jiemin, vice-chairman of PetroChina and president of CNPC, once said that as "As a red-chip company, PetroChina's A-share listing may be easier than CNOOC's," Fu Chengyu, chairman of CNOOC Ltd, the Hong Kong-listed branch of China National Offshore Oil Corp (CNOOC), told China Daily. As CNPC is PetroChina's parent firm and the highest applicable percentage ratio exceeds 2.5 percent, the disposal constitutes a connected transaction subject to reporting, announcement and independent shareholder approval requirements. China United's net income last year rose 3.7 percent to 273 million yuan, Bloomberg reported. Sinochem Corp owns the remaining 30 percent stake in China United. (
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