PipeChina to take on $56 bln of pipelines to boost network access
CGTN
A PetroChina petrol station in Wuhan, China, May 20, 2020. /VCG

A PetroChina petrol station in Wuhan, China, May 20, 2020. /VCG

China has taken a major step in the reform of its national oil and gas pipeline network, with newly formed PipeChina agreeing to buy pipelines and storage facilities valued at 391.4 billion yuan (55.9 billion U.S. dollars).

Under the deal, PipeChina, known formally as China Oil and Gas Pipeline Network, will take over oil and gas pipelines and storage facilities from state-owned energy giants PetroChina and Sinopec, in return for cash and equity in the pipeline company.

Investment banks Morgan Stanley and Goldman Sachs had been tapped to act as advisers in the transfer of pipeline assets, which analysts had previously valued at more than 40 billion U.S. dollars. The government aims to have PipeChina operating by end-September.

The new company will take on the pipelines, storage facilities and natural gas receiving terminals operated by behemoths China National Petroleum Corp (CNPC), China Petroleum and Chemical Corp (Sinopec Group) and China National Offshore Oil Company (CNOOC).

PetroChina, a listed arm of CNPC, said on Thursday it will spin off pipeline and storage facilities, a liquefied natural gas (LNG) terminal in Shenzhen and ancillary facilities for 268.7 billion yuan, above book value of 223 billion yuan. 

Sinopec also said on Thursday it had agreed to sell some of its pipelines assets and the Beihai LNG terminal to PipeChina for 122.6 billion yuan. That compares to a book value of 86.4 billion yuan.

After the deals, expected to be completed before September 30. PetroChina and Sinopec will hold 29.9 and 14 percent, respectively, of PipeChina, whose market cap is 500 billion yuan.

CNOOC Gas and Power, a subsidiary of China's top offshore oil and gas producer CNOOC Group, will own 2.9 percent of PipeChina.

(With input from Reuters)