China: PetroChina Back on the Acquisition Trail

Chairman Jiang Jiemin told shareholders in Beijing that PetroChina was studying the possibility of acquiring financially stressed resources companies, without naming likely targets.  Oil companies in China have resumed their quest for global resources after a two-year gap.

Falling commodity prices prompted a sell-off in share markets, making companies cheaper to acquire.  Highly leveraged companies are also seeking to sell assets to ease their debt burdens and cut refinancing risks.  The drop in oil prices and the bank crisis offered good opportunities for PetroChina to consolidate resources, Jiang said. PetroChina had no financing problems, he said.

“Opportunities for mergers and acquisitions have increased but there are uncertainties as oil prices remain volatile and such discussions typically take a long time,” Grace Liu, an oil analyst with Guotai Junan Securities Hong Kong said in the southern city of Shenzhen.

PetroChina wanted to see oil prices at about $80 a barrel, Jiang said.  The company’s refining unit would post a profit next month , he said. China’s second-biggest refiner reported a loss of 59-billion yuan ($8,6bn) between January and June this year, compared with a profit of 3,9-billion yuan a year earlier.

PetroChina would spend a higher proportion of its investment on its “core business” next year, Jiang said, without giving details.

PetrolWorld 241008