(Reuters) -PetroChina on Tuesday proposed to take over three natural gas storage facilities from its controlling shareholder, state-owned China National Petroleum Corporation, in a deal worth 40.02 billion Chinese yuan ($5.59 billion).
The deal comes as China’s biggest oil and gas producer looks to ensure stable operation and develop its natural gas industrial chain, aiming to capitalize on the country’s increasing reliance on the lower-emission fuel critical to the shift to greener energy.
“This will enhance adjustment efficiency and maximize the overall benefits of the natural gas industry chain,” PetroChina said in an exchange filing.
The deal is estimated to add 10.97 billion cubic metres of working gas storage capacity to its portfolio.
PetroChina has approved the plan to buy Xinjiang Gas Storage, Xiangguosi Gas Storage and Liaohe Gas Storage from its top shareholder.
China has been stepping up natural gas use to strengthen energy security and cut reliance on coal, part of its push to lower emissions and improve air quality.
PetroChina also posted a 5.4% decline in first-half net income earlier in the day.
However, the company’s gas segment reported 18.6 billion yuan in earnings, higher than a year ago.
PetroChina expects Chinese oil demand to continue facing competition from alternative energy, but it projects natural gas demand to recover and grow rapidly.
($1 = 7.1529 Chinese yuan renminbi)
(Reporting by Rishav Chatterjee in Bengaluru; Editing by Shreya Biswas and Devika Syamnath)
