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Beijing to put PetroChina in global share offering

HONG KONG: China, attempting to take its ageing, troubled oil industry in a great leap forward, said on Sunday it will put its largest oil and gas producer onto world markets in a global share offering to raise some US$3.1 billion.

The offer by PetroChina, listing vehicle of China National Petroleum Corp (CNPC), will be a key test of buyers' appetite for lumbering Chinese state-owned enterprises at a time when markets everywhere are infatuated with high-technology stocks.

Some 17.58 billion H shares, or 10 percent of the enlarged share capital in PetroChina, will be offered at between HK$1.24 and HK$1.51 each, including brokerage and transaction levies, coordinators of the deal said at a news conference.

Of that amount, 15.82 billion shares are being offered by PetroChina and 1.76 billion shares are offered by CNPC.

The global offering comprises four tranches.

The Hong Kong public offer will involve 879.12 million shares, or five percent of the global offer, and will begin on Monday and end on March 30, when pricing would be determined, the company said.

Trading in Hong Kong is expected to begin on April 7.

The other three tranches, to be offered in Asia, the United States and Europe, will comprise American Depository Shares (ADS) priced at between $15.93 and $19.40 each, which could be delivered in the form of H shares, PetroChina's prospectus said.

The ADS, to be listed in New York, will begin trading on April 6.

The company said it had secured a number of corporate investors.

BP Amoco Plc will take a 20 percent stake in the global offer or up to a maximum of $1 billion.

Backing it are also Hong Kong heavyweight developers Cheung Kong Holdings Ltd, Hutchison Whampoa Ltd, Sun Hung Kai Properties and Chow Tai Fook Nominee, the parent of New World Development Co Ltd.

For years, piecemeal efforts by individual China refineries and oil and gas producers to secure overseas funding to modernise and raise production have yielded little or no results.

Although the lure of China's explosive domestic oil demand is great, the country's oil and gas industry is riddled with problems -- producing fields are ageing, refineries are outdated and saddled with massive workforces and debts.

At the briefing, PetroChina chairman Ma Fucai said most of the funds raised would be used for key businesses.

"Sixty percent will be for capital expenditure, exploration and production, improving our Daqing oilfields, building the east-west (gas) pipeline, retail and marketing," Ma said.

The rest would be used to pay debts and laid-off workers.

PetroChina's offering has also been shrouded in recent months by political complications, caused chiefly by CNPC's involvement in a refinery in U.S.-sanctioned Sudan.

Asked about the Sudan factor, Ma said PetroChina had no foreign assets and no plans in the near future to expand overseas.

All overseas assets linked to CNPC would remain under the parent company, which retains a 90 percent stake in PetroChina.-Reuters