China’s state-owned oil and gas firm PetroChina has agreed to sell its major oil and gas pipelines, liquefied natural gas (LNG terminals), and storage facilities to the country’s new oil and gas pipeline company PipeChina.
The deal is valued at about CNY268.7bn ($38.36bn).
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The target assets under the deal also include certain gas and oil storage facilities and other associated infrastructure.
According to Reuters, Beijing started considering plans to reform the oil and gas sector about a decade ago to improve market access to small, non-state owned oil and gas producers and distributors.
However, it only approved the plans early last year, driven by a national campaign to improve cleaner burning natural gas consumption.
Under the latest deal, PetroChina will get a stake of 29.9% in PipeChina, worth CNY149.5bn ($21.3bn).
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By GlobalDataPetroChina also noted it would receive the remaining in cash from the new company.
The sale does not include the pipeline assets of Kunlun Energy, in which PetroChina owns a 54.4% stake.
Upon completion of the deal, PipeChina will become PetroChina’s associate entity. PetroChina is a listed arm of China National Petroleum Corp (CNPC).
In a statement, PetroChina said that it expects to record a profit of CNY45.82bn ($6.54bn) from the sale of its assets. It will use the proceeds on capital expenditure (capex) and dividends.
Meanwhile, in a separate development, China Petroleum & Chemical Corp (Sinopec) announced its plans to sell its gas infrastructure assets for CNY47.11bn ($6.72bn) to PipeChina.
In January 2016, PetroChina and Chevron commenced production from the Luojiazhai gas field, onshore China.
