PetroChina Company Limited

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Type	Public SEHK: 0857 SSE: 601857 NYSE: PTR
Industry	Oil and gas
Founded	1999 (1999)
Headquarters	Dongcheng District, Beijing, People's Republic of China
Area served	China
Key people	Jiang Jiemin Chairman of the Board Zhou Jiping CEO
Products	Fuels, lubricants, natural gas and other petrochemicals
Revenue	$221.57 billion (FY 2010)[1]
Operating income	$28.39 billion (FY 2010)[1]
Net income	$21.16 billion (FY 2010)[1]
Total assets	$250.46 billion (FY 2010)[2]
Total equity	$141.96 billion (FY 2010)[2]
Employees	539,168 (FY 2010)[1]
Parent	China National Petroleum Corporation
Website	petrochina.com.cn/ptr/

PetroChina Company Limited (Chinese: 中国石油天然气股份有限公司, Chinese: 中國石油天然氣股份有限公司) (SEHK: 0857, SSE: 601857, NYSE: PTR) is a Chinese oil company and is the listed arm of state-owned China National Petroleum Corporation (CNPC), headquartered in Dongcheng District, Beijing.^[3] It is China's biggest oil producer.^[4] Traded in Hong Kong and New York, the mainland enterprise announced its plans to issue stock in Shanghai in November 2007,^[4] and subsequently entered trading on the Shanghai index.

History[link]

The landmark of Dongzhimen -- the headquarters of PetroChina in Beijing.

PetroChina was established as a joint stock company with limited liabilities under the Company Law of the People's Republic of China (the PRC) on November 5, 1999, as part of the restructuring of CNPC. In the restructuring, CNPC injected into PetroChina most of the assets and liabilities of CNPC relating to its exploration and production, refining and marketing, chemicals and natural gas businesses.

Although PetroChina is the most profitable company in Asia, this success may be the result of corporate management, but can also be attributed to the near duopoly on the wholesale and retail business of oil products it shares with Sinopec in China.

Because of Sinopec's link to Sudan through parent company China Petrochemical Corporation, several institutional investors such as Harvard and Yale decided, in 2005, to divest from Sinopec. Sudan divestment efforts have continued to be concentrated on PetroChina since then.^[5] Fidelity Investments, after pressure from activist groups, also announced in a filing in the US that it had sold 91 per cent of its American Depositary Receipts in PetroChina in the first quarter of 2007.^[6]

At the beginning of May 2007, the company announced it had made China's largest oil find in a decade off the country's northeast coast, in an oilfield named Jidong Nanpu in Bohai Bay.^[7] In May 2008 these expectations were lowered.^[8]

On November 7, 2007, Hang Seng Index Services Company announced that PetroChina would be a Hang Seng Index Constituent Stock, effective December 10, 2007.^[9] PetroChina has also come under scrutiny from international organizations for its part in trading with the Sudanese government who continues the ongoing war in Darfur.

On August 19, 2009, PetroChina signed an AU$50 billion deal with ExxonMobil to purchase liquefied natural gas from the Gorgon field in Western Australia,^[10][11] considered the largest contract ever signed between China and Australia, which ensures China a steady supply of LNG fuel for 20 years, and also forms as China's largest supply of relatively "clean energy".^[12][13] This deal has been formally secured, despite relations between Australia and China being at their lowest point in years, following the Rio Tinto espionage case and the granting of visas to Rebiya Kadeer to visit Australia.^[14]

PetroChina's Dushanzi District refinery became fully operational on September 24, 2009. The refinery is China's largest refinery with annual capacity of 10 million tons of oil and 1 million tons of ethylene. The refinery is an integral part of China's ambitions to import oil from Kazakhstan.^[15]

February 2011: PetroChina has agreed to pay $5.4 billion for a gas field stake owned by Encana. It is the China's biggest investments in shale gas which is difficult-to-extract.^[16]

Environmental record[link]

Although PetroChina is promoting safety, environmental protection and people-orientation as its slogan and is determined to encourage efficiency in utilization of resource as well as effective operation of the Health, Safety and Environment (HSE) management system as a method to reduce emission of pollutants.^[17]

Chemical spill[link]

Petrochina had a chemical spill in November, 2005. One of its chemical plants exploded in Jilin, China, resulting in 100 tons of benzene, which is a carcinogen and toxic, pouring into the Songhua River. There was a slick of chemicals that spanned 80 kilometres.^[18] Harbin, which is another city along the Songhua River, had to cut the water supply from almost 4 million people, for 5 days. More than 60 people were injured, five died, and one person was missing due to the incident.^[19] The spill prompted China’s environmental agency to fine the company one million yuan (approximately $125,000, £64,000) for its pollution, which was the maximum fine that can be handed out in China for breaking an environmental law.^[20] However, this disaster sparked controversy about this law. People claimed the law was too soft.^[21] The spill even crept into Khabarovsk, Russia, where residents stocked up on bottled water. The city tried filtering its water of toxic substances, but officials were still unsure if the water was 100% safe for drinking.^[22] The Chinese government said it will take more than one billion dollars to clean up the aftermath.^[18] Li Zhaoxing, Chinese Foreign Minister at the time, issued a public apology to Russia due to the incident.^[23]

The "Western Gas to the East" Pipeline Project[link]

A PetroChina gas station in Xinjiang

Another major controversial issue is PetroChina’s development in gas reserves in Tarim Basins, Xinjiang. It is now constructing a pipeline across Tibet to Gansu province in China, eventually lead to Shanghai. It is argued that such a project might pose a threat to the environment, as the construction of the pipeline might affect the wildlife in the regions where it runs through. Also, the exiled Tibetan government argued that such project is part of China’s strategy to consolidate political control of the Western Regions in China, including Tibet. However, no known environmental or social impact assessments have been conducted, as the environmental record of Tarim Basins is very poor.^[24]

Demonstration at new plant[link]

Approved in 2007, a $5.5 billion petrochemical plant, expected to produce 800,000 tons of ethylene and refine 10 million tons of crude oil a year, is now under construction by PetroChina in Chengdu, provincial capital of Sichuan in Southwestern China. Ethylene is widely used in the production of goods such as packaging and trash liners. Although the project claimed that $565 million of the total investment would be dedicated to environmental protection, residents of Chengdu who believe it might bring pollution to the local area took to the streets on May 3 and 4, 2008, to protest against the project. The whole demonstration was peaceful, and presence of Chinese government intervention was scarce.^[25]

Recognition[link]

• Forbes published its latest ranking of the “Forbes 2000 The World’s Leading Companies”. The company ranked 6th in the world for public companies.^[26]
• The Company won a series of awards in the competition organised by FinanceAsia, an influential magazine in Asia Pacific capital markets. The Company won the following awards:
  • Best Dividend Payout Policy, 1st
  • Best Corporate Governance, 5th
  • Best Investor Relations, 5th
• AsiaMoney’s 2004 “Annual Best-Managed Large Companies Poll”, the Company was awarded the “Overall Best-Managed Large Cap Company” and “Overall Most Improved Company for Best-Management Practices” Awards.

Corporate bonds[link]

PetroChina, on 2008-10-24 issued a 80 billion yuan ($11.7 billion) of medium-term corporate bonds, which was the biggest ever domestic issue by a listed company.[1]

References[link]

• 2004 Annual Report, pp. 135, 137 [2]

External links[link]

• Official website (English)
• Official website (Chinese)
• PetroChina stock quote Google Finance

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