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Chinese state-owned oil company China National Petroleum Corp has concluded a complicated asset shuffle that allows state-owned steel mill Baosteel, two Chinese insurers and a number of funds to acquire stakes in three mammoth pipelines carrying gas across China.
CNPC has long resisted plans by bureaucrats in Beijing to force it to open the pipeline network. But a sharp drop in oil prices has hit revenues at both the state-owned CNPC and its Hong Kong-listed unit PetroChina.
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Income at both entities has dropped “dramatically” this year, PetroChina president Wang Dongjin said in a statement on CNPC’s website this month.
The sale is the next in a series of steps through which CNPC and PetroChina are consolidating a sprawling pipelines business.
Beijing has indicated it could ultimately form a separate pipeline monopoly to encourage the development of China’s domestic natural gas industry which has so far been limited by CNPC’s stranglehold over the majority of the country’s pipeline network.
The total value of the pipelines is Rmb281.4bn ($43bn), PetroChina said.
The sale is an extension of a 2013 transaction in which PetroChina hived off an Rmb20bn stake in some of the pipelines to Baosteel and the other institutional investors to help raise money to complete the massive projects. At the time, that sale was hailed as part of a reform to allow non-energy companies into China’s tightly controlled state-owned energy sector.
Last month, PetroChina sold a portion of its Trans-Asia Gas Pipeline business to state-owned asset holding company China Reform Holdings, for Rmb15bn-Rmb15.5bn.
In a statement to the Hong Kong stock exchange on Thursday, PetroChina said it would consolidate three pipeline companies into PetroChina Pipelines, in which it would own 72.26 per cent. The other shareholders in the pipeline companies, dating from the 2013 investment, would take shares in the combined entity.