PetroChina to Buy 50% Stake In Overseas JV for $11.8B
BEIJING (Dow Jones Newswires), August 25, 2008
PetroChina Co. has agreed to buy a 50% stake held by its parent company, China National Petroleum Corp., in an international joint venture in a deal worth $11.8 billion, a person familiar with the situation said Monday.
PetroChina favors issuing new shares on the Shanghai Stock Exchange to finance the purchase of CNPC Exploration and Development Co., but is worried about current weakness in the market, the person said.
PetroChina's A-shares closed Friday at CNY13.49, just above their lowest settlement of CNY13.31 on Aug. 18. China's largest-listed oil producer is due to disclose its earnings Wednesday for the first half of 2008.
PetroChina spokesman Mao Zefeng declined to comment when contacted by Dow Jones Newswires, as did CNPC.
Following the deal's closure, PetroChina will wholly own CNPC E&D, which holds assets in more than 10 countries including Kazakhstan, Venezuela, Algeria, Peru, Oman, Canada, Chad, Indonesia and Ecuador.
But the venture doesn't include CNPC's oil and natural gas assets in Sudan, which are politically sensitive and have been the focus of activists in the U.S. encouraging investors to sell out of PetroChina.
PetroChina has owned 50% of the joint venture since June 2005 when it paid CNY20.74 billion to CNPC in a move seen as setting the stage for its overseas expansion. That deal is worth $3 billion at current exchange rates.
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