PetroChina plans US$47 billion gas pipeline sale as part of Beijing’s energy sector reforms

PetroChina is discussing selling a stake in domestic gas pipelines worth an estimated US$47 billion in total, sources said, in a move seen as a prelude to Beijing's plans to break the state giant's near monopoly and boost spending on energy infrastructure.

The sale could attract domestic interest from Chinese institutions, asset managers and private equity investors, sources said.

PetroChina produces two-thirds of China's natural gas and controls nearly 80 per cent of the mainland’s 90,000km of gas pipelines, a bottlenecked grid that has prevented greater use of a fuel with half the greenhouse gas emissions of China's biggest energy source, coal.

Beijing is expected to unveil a sweeping reform package within weeks that targets its vast energy sector, part of a broader restructuring drive to boost efficiency and bring in private investment.

A senior source with knowledge of the plan said PetroChina, which transports mostly its own gas in its pipes, was preparing to sell part of its premium domestic gas pipeline assets, worth around 300 billion yuan (HK$361 billion), which includes three trunk lines running from the country's far west to its eastern and southern shores.

“This is a good avenue for them to raise funds for capex and cutting debt,” said a Hong Kong-based investment banker who has advised PetroChina on past transactions.