Updated: 2005-06-11
To boost stagnant domestic reserves and forge a platform for overseas expansion, PetroChina, China's largest oil and gas company, has agreed to pay 20.7 billion yuan (US$2.5 billion) for overseas assets in its State-owned parent.

PetroChina will buy a 50-per-cent stake in its parent China National Petroleum Corp's (CNPC) venture which sits on oil and gas assets in 10 foreign countries, including Kazakhstan, Venezuela, Algeria, Peru, Oman, Azerbaijan, Canada, Ecuador, Niger and Chad.

CNPC's assets in Sudan - which make up more than half its overseas portfolio - were excluded from the venture. Sudan is currently subject to sanctions from the United States.

PetroChina will also inject its Indonesian oil and gas assets, worth 579.4 million yuan (US$70 million), into the venture.

The transactions are expected to boost the company's international reserves by 879 per cent to 866 million barrels of oil equivalent. The deal will also increase the company's total oil and gas reserves by 4.31 per cent and lift output by 5.41 per cent, the statement said.

PetroChina has seen its oil output growth flat-line in recent years as most of its older oilfields are depleting. Its crude oil output grew by just 0.5 per cent to 778.4 million barrels in 2004.

"The two transactions represent a milestone in our efforts to become a large international energy company," said Chen Geng, chairman of PetroChina.

"With this strategic platform and sizable overseas portfolios, we can grow our domestic businesses into global operations by increasing overseas reserves and production."

Chief Financial Officer Wang Guoliang told reporters in Hong Kong that PetroChina was eyeing more than 10 other potential foreign acquisitions. Some of those projects are expected to be finalized this year.

PetroChina shares rose 2.83 per cent to HK$5.45 (70 US cents) on Friday, hitting a record high of HK$5.50 during Friday trading after a one-day suspension.