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PetroChina and Sinopec to strike a $56 billion deal with PipeChina

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Miguel A. Rodriguez
Miguel A. Rodriguez
14 September 2020
The Chinese government wants to reform its oil and gas pipeline network

The end of the week comes bearing deals from the Asian side of the world. China is taking steps in its plan to reform the national oil and gas pipeline network. The newest oil and gas company, PipeChina, is to buy storage facilities and pipelines valued at $56 billion. 

PipeChina was created in 2019 to provide neutral access to the Chinese pipeline infrastructure, part of which it is currently owned by PetroChina, to help non-state-owned and small companies, and attract investment in the energy sector.

Besides the pipelines and storage facilities, the deal will bring PipeChina equity in PetroChina and Sinopec (China Petroleum and Chemical Corp). 

The deal between PipeChina and PetroChina consists of over 70% stakes in PetroChina’s Pipelines, stakes between 50% and 70% in oil products and transmissions, and a 60% stake in gas pipelines and networks.

PipeChina will acquire a 100% stake in a natural gas pipeline from Sinopec for $460 million in a separate deal. 

PetroChina and Sinopec will get stakes in PipeChina of 29.9%, and 14%, respectively. 

The assets alone are valued at more than $40 billion. Morgan Stanley and Goldman Sachs will supervise and manage the deals.

The government’s goal is to have PipeChina operating by the end of September. 

The market reacted positively to the news, PetroChina’s stock price gained more than 3%, but Sinopec dropped by 0.70%. 

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Sources: reuters.com, nsenergybusiness.com

This information/research prepared by Miguel A. Rodriguez does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. The research analyst primarily responsible for the content of this research report, in part or in whole, certifies that the views about the companies and their securities expressed in this report accurately reflect his/her personal views and consequently any person acting on it does so entirely at their own risk.The research provided does not constitute the views of KW Investments Ltd nor is it an invitation to invest with KW Investments Ltd. The research analyst also certifies that no part of his/her compensation was, is, or will be, directly, or indirectly, related to specific recommendations or views expressed in this report.The research analyst in not employed by KW Investments Ltd. You are encouraged to seek advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit that conforms to your specific investment objectives, financial situation, or particular financial needs before making a commitment to invest. The laws of the Republic of Seychelles shall govern any claim relating to or arising from the contents of the information/ research provided. 

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Miguel A. Rodriguez
Miguel A. Rodriguez
Financial Writer

Miguel worked for major financial institutions such as Banco Santander, and Banco Central-Hispano. He is a published author of currency trading books.