CHINA'S OIL&GAS REFORMS
SHANGHAIDAILY - SHARES of China National Petroleum Corp and Sinopec rebounded during the week on reforms that are set to transform the two oil and gas giants into more competitive and market-focused entities.
Shanghai-listed CNPC gained over the four trading days to close at 8.36 yuan (US$1.2) yesterday, 5.16 percent higher than on the last trading day of 2016, while China Petroleum and Chemical Corp, or Sinopec, ended 8.5 percent higher at 5.87 yuan — its largest weekly growth for nearly one and half years.
The surge came after domestic investors became confident that the profit of the two giants would rise due to the reforms "which are necessary to help them stay competitive in the long term," said Gordon Kwan, head of oil and gas research for Asia at Nomura Securities.
CNPC opened its first regional gas sales company in Guangzhou last Sunday to sell natural gas under a market-oriented pricing system by involving "third-party participation" to enable other suppliers to sell gas developed by CNPC, said Deng Yusong, vice president of the Market Economy Institute at the Development Research Center of the State Council.
Previously, CNPC's oil and gas pipeline operations and sales were integrated by the state-owned group, "ruling out market competition," Deng said.
The sales company had sold 158 million cubic meters of natural gas by Thursday, while by 2020 it estimates 20 billion cubic meters would be sold annually, reported Southern Metropolis Daily.
The company's business covers Guangdong, Hubei, Hunan, Jiangxi, and Hainan provinces as well as Hong Kong.
Not to be outdone, Sinopec on Wednesday hired six banks to advise on its restructuring of a fuel distribution unit to pave the way for a Hong Kong initial public offering to "raise about US$12 billion," Reuters reported, citing an individual familiar with the matter.
The reform would transform the unit into a mixed-ownership entity.
CNPC, whose third quarter profit slumped 94.37 percent from a year ago, was reportedly "desperate to reform," while Sinopec reaped 29.2 billion yuan in profit during the same period, up 12.64 percent from 2015, by optimizing organizational structure and product portfolio, said China Business News.
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