PetroChina: Return to Domestic Stock Market      

Being one of the largest listed oil companies in the world and also the most profitable listed companies in Asia, the return of PetroChina (0857.HK) to the domestic stock market has aroused a great attention. Shares issued by PetroChina in Mainland China will be highly acclaimed by domestic investors.

Resource advantage

PetroChina was established by CNPC in 1999 and got listed in the United States and Hong Kong in April 2000. Since its listing in overseas stock markets, the operation of PetroChina has always maintained a rapid growth. The composite growth of the operating revenue and the net profit in the past 5 years reached 28.9% and 31.6% respectively.
   The business scope of PetroChina includes oil prospecting and production, refining and sales, chemical production and sales, natural gas production and pipeline transmission. It is an integrated oil company that holds a leading position in China.
   PetroChina is the largest crude oil and natural gas producer in China. By the end of 2006 the proven reserves of crude oil and natural gas in PetroChina was 11.62 billion barrels and 1 500 billion m3 respectively, accounting for 70.8% and 85.5% of the total amount owned by the 3 major oil companies (PetroChina, Sinopec and CNOOC) in China. The output of crude oil in the company was 830 million barrels in 2006 and the output of natural gas was 44.95 billion m3, accounting separately for 66.4% and 78.5% of the total output in the 3 major oil companies. PetroChina has recently intensified oil/gas prospecting and successfully discovered new oil/gas resources in the Erdos Basin, the Songliao Basin, the Zenger Basin, the Sichuan Basin and the Tarim Basin. The resource basis for the sustainable development of the company has been further consolidated.
   PetroChina is one of the largest oil product producers and sellers in China. The company has quite a few large refineries and owns a nationwide oil product terminal sales network. By the end of 2006, PetroChina already set up around 1 073 oil product wholesale distribution stations and owned and operated 18 207 filling stations throughout China.
   PetroChina is also one of the major chemical product producers and sellers in China. Chemical products such as ethylene and synthetic resins being produced by the company hold a considerable share in the domestic market. By the end of 2006 the production capacity of ethylene in the company was 2.63 million t/a, accounting for 26.6% of the national total. PetroChina's output of ethylene was 2.068 million tons in 2006, accounting for 22% of the national total.
   Besides, PetroChina is the largest natural gas producer and seller in China and also holds a leading position in crude oil and oil product pipeline transmission. By the end of 2006 the company owned and operated natural gas pipelines with a length of 20 590 km, accounting for 77.8% of the national total. The sales amount of natural gas in the company reached 38.42 billion m3 in 2006, accounting for 73.6% of the national total.

Benefits to Investors

With the rapid development of the company, the prices of shares issued by PetroChina have increased by more than 10 times since its listing in overseas markets. Benefits to investors are quite large. Nevertheless, PetroChina is outside of the domestic stock market and domestic investors have lost the chance to share the performance growth of the company.
   The return of PetroChina to the domestic stock market is a piece of good news to the domestic stock market with the surplus of capital flow and the lack of stock circulation. It can absorb adequate capital and reduce bubbles in the domestic stock market and also offer domestic investors a higher-quality investment option.
   To PetroChina itself, the return to the domestic stock market can also help the company construct a new financing platform, strengthen the stock circulation and upgrade the core competitive edge. Financing in the domestic stock market is favorable to the further improvement of the operating capital status in the company and can provide capital support to its development of oil/gas resources and the technical renovation and capacity expansion in refining and chemical segments. According to the manager of PetroChina, in addition to fund-raising, what is more important is to enable domestic investors to share the fruits in the growth of the company and the rapid economic development in China and give them more benefits.

Operation of PetroChina in 2006
Turnover (RMB billion)    688.98
   Growth over 2005 (%)    24.80
Net profit (RMB billion)    142.20
Source: CNCIC