pchina plans $60 billion of overseas expansion

PetroChina Plans $60 Billion of Overseas Expansion

March 29 (Bloomberg) -- PetroChina Co. plans to spend at least $60 billion in the next decade on overseas acquisitions, challenging Exxon Mobil Corp. and BP Plc in the race to control oil and gas fields.

�Ten years ago, PetroChina was a state-owned oil company, but now we have a goal of becoming an international, integrated energy company,� Jiang Jiemin, chairman of the world�s largest company by market value, said in a March 25 interview, where he announced the investment plan.

Exxon is counting on gas to provide the bulk of its future growth with the acquisition of XTO Energy as well as new developments from the South Pacific to the Celtic Sea. BP, vying with Royal Dutch Shell Plc as Europe�s biggest oil company, paid at least $8.3 billion to acquire assets over the past 12 months.

Record Spending

Spending by Chinese companies on mining and energy acquisitions reached a record $32 billion last year. China Petroleum & Chemical Corp., Asia�s largest refiner, said yesterday it will pay $2.5 billion to buy a stake in an Angolan oil field from parent China Petrochemical Corp. to increase crude its production by 8.8 percent.

�I think a total investment of not less than $60 billion is needed to form our five regions of global oil and gas cooperation, by 2020,� Jiang said. PetroChina spent between $2 billion and $3 billion annually in the past five years, so the planned investment �is clearly a step up,� Beveridge said.

Gas Growth

Longer-term investors are betting on PetroChina�s success, driving the shares up 40 percent in the last 12 months. That beat the 38 percent gain in BP and well outperformed the 3.1 percent decline in Exxon.

PetroChina wants half its oil and gas to come from abroad by 2020, Jiang said in Hong Kong. The company, more than 80 percent owned by the state, currently gets less than a tenth of its production from overseas.

China wants to triple the use of gas to about 10 percent of energy consumption by 2020 to reduce use of coal. The country plans to import 68 billion cubic meters of the cleaner-burning fuel a year from Russia through two pipelines, Jiang said. That�s about 80 percent of China�s gas production last year.

�PetroChina is definitely among the key players globally now in the hunt for resources overseas,� Beveridge said. �It�s increasingly apparent that the international oil majors can no longer call all the shots.�