State-controlled oil firm PetroChina Co. Ltd. (00857.HK), in an effort to shore up confidence in its balance sheet, has announced a plan to sell off a stake worth more than US$2 billion in its natural gas pipeline assets.
In a statement to the Shanghai Stock Exchange late Wednesday, PetroChina said its board had approved the plan to divest a 50 percent stake in its Trans-Asia Gas Pipeline Co. subsidiary to a unit of state-owned China Reform Holdings Corp.
PetroChina valued the stake at 15.5 billion yuan (US$2.4 billion).
The decision comes as China’s oil companies look to shore up their balance sheets amid a prolonged slump in oil and gas prices that has weighed heavily on earnings this year, The Wall Street Journal reported.
PetroChina’s net profit in the third quarter plunged more than 80 percent, weighed down by weak global demand for oil and gas that has sent prices tumbling, as well as slowing growth in the Chinese economy that has reduced domestic demand for products it sells, such as diesel fuel.
The transaction marks the start of long-anticipated industry reforms that aim to make China’s energy behemoths leaner and more profitable through divestment of pipeline and potentially other assets.
The stake being divested by PetroChina includes part of a critical network of pipelines that links the Xinjiang region to major natural gas supplies in Central Asia.
PetroChina also disclosed the resignation of its chief financial officer, Yu Yibo, effective Tuesday. It named Zhao Dong as his replacement.
– Contact us at [email protected]