PetroChina Takes First Steps to Acquire Scotland’s Oil Refinery

 www.businessweek.com | March 07, 2010

March 5 (Bloomberg) -- PetroChina Co., the nation’s biggest energy producer, started taking initial steps in its acquisition of Scotland’s only oil-processing plant that would give the Hong Kong-listed company its first European refining operation.

“Preliminary work” on a bid for the Grangemouth refinery owned by Ineos Group Holdings Plc is under way, PetroChina Chairman Jiang Jiemin told reporters in Beijing today before attending a meeting of the National People’s Congress. Talks had already begun, a Falkirk councilor said last year.

PetroChina is investing in refineries to reduce dependence on oil production while expanding exploration and increasing overseas cooperation to meet domestic demand. Acquisitions last year included a stake in Nippon Oil Corp.’s Osaka processing plant, a refinery in Singapore, a $1.46 billion venture in Kazakhstan with KazMuniaGaz National Co. and a $1.7 billion deal to buy a stake in an oil-sands project in Canada.

Parent China National Petroleum Corp. hasn’t held talks to acquire the Argentine unit of Repsol YPF SA, Jiang said.

CNPC had proposed offering $13 billion to $14.5 billion for a controlling stake in the unit, a person familiar with the matter said in July. On July 2, Repsol said it had been approached by companies interested in its YPF unit, adding that none of the proposals was “firm.”

On Nov. 12, Repsol Chief Operating Officer Miguel Martinez said there has been no progress on the stake sale, without naming any companies involved in talks.

The shares of PetroChina have risen 70 percent over the past year, matching the gain in the benchmark Hang Seng Index. The oil and gas producer, which reported a 24 percent drop in third-quarter profit, climbed 1.8 percent today to HK$8.93.

PetroChina’s Outlook

The 2010 profit outlook for PetroChina “will definitely be better than last year,” Jiang said.

China’s recovering economy is leading the world out of recession, boosting oil prices and demand for gasoline and diesel. PetroChina stands to gain after the Chinese government relaxed controls on fuel prices and assured refiners a profit.

The state raised fuel prices five times and cut them three times last year, compared with two adjustments in 2008, after the introduction of a mechanism to adjust oil-product prices for changes in crude costs and ensure refiners a profit.

Fueling China’s Economy

China will actively compete for global oil, gas and mineral resources to fuel the nation’s economy, Zhang Xiaoqiang, vice chairman of the National Development and Reform Commission, the country’s top economic planner, said on Jan. 5.

PetroChina will start work to develop Iraq’s Halfaya oilfield in the second half, Jiang said. The company has a 37.5 percent stake in the venture.

The Chinese company, Petroliam Nasional Bhd. and Total Exploration & Production Co. signed an agreement to jointly develop Halfaya for 20 years, PetroChina said on Jan. 27.

PetroChina plans to start two terminals for importing liquefied natural gas next year, Jiang said. The terminals will be in the northeastern port city of Dalian and in the eastern province of Jiangsu, he said.

The Beijing-based company has agreed to buy additional LNG from Qatar, Qatargas Operating Co. said in a statement on its Web site on Nov. 13.

It may take a long time for PetroChina to sign a final contract to buy additional LNG from Qatar because of “uncertainty” in the global market, Jiang said today.