CNPC Receives $30 Billion Loan for Overseas Expansion (Update1)
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By Bloomberg News
Sept. 9 (Bloomberg) -- China National Petroleum Corp., parent of the world’s biggest company by market value, received a $30 billion loan from a state bank to fund its “rapid overseas expansion.”
The five-year loan will be provided at a discounted interest rate by China Development Bank under an agreement signed yesterday, PetroChina Co.’s parent said in a statement on its Web site today.
Chinese oil companies have spent 83 billion yuan ($12 billion) this year to acquire assets in countries including Kazakhstan, Syria and Singapore, according to information on China National’s Web site. The world’s third-biggest economy is taking advantage of lower valuations to build reserves and ensure future supplies after oil demand doubled in the last decade.
The loan is equivalent to PetroChina’s 2009 capital expenditure budget of 200 billion yuan, Gordon Kwan, the head of regional energy research at Mirae Asset Securities Ltd. in Hong Kong, said in an e-mailed note. “This reflects China’s intensifying desire to beef up long-term national energy security by acquiring overseas reserves, exploiting depressed oil prices while diversifying away from holding too much U.S. dollar bonds.”
Oil prices
Oil prices in New York have fallen about 51 percent from a record $147.27 a barrel reached last year. China is the world’s largest foreign holder of U.S. treasury bills. The country’s U.S. government debt holdings stood at $776.4 billion as of June 30.
China’s oil consumption doubled in the last decade to 8 million barrels a day in 2008, according to BP Plc’s Statistical Review. It imported about 3.6 million barrels of oil a day last year, meeting about 45 percent of its needs.
“The credit agreement is of great importance for CNPC to speed up its overseas expansion strategy and secure the nation’s energy supplies,” President Jiang Jiemin said in the statement today.
China will boost output from fields abroad to more than 100 million metric tons by 2010, accounting for more than a quarter of the nation’s total, China National, also known as CNPC, said in a report published in its newsletter yesterday.
China’s latest takeovers include PetroChina Co.’s C$1.9 billion ($1.7 billion) agreement this month to buy 60 percent stakes in Athabasca Oil Sands Corp.’s MacKay River and Dover oil-sands projects. PetroChina agreed in May to buy Singapore Petroleum Co., the city’s only listed refinery, for $2.2 billion.
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