PetroChina Abandons Husky Deal

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Last updated at: (Beijing Time) Monday, April 22, 2002

PetroChina Abandons Husky Deal

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PetroChina, the nation's largest oil company, has decided not to buy the assets of Husky Energy, Canada's No 5 oil producer, after Husky shares sharply surged on acquisition speculations, said a senior Chinese official.

"Absolutely, PetroChina will not finalize the deal... No one will buy it (Husky) as its price is so high," Zhang Guobao, vice-minister of the State Development Planning Commission, told reporters over the weekend.

Zhang, who was attending the China Business Summit, also said the nation plans to build another liquefied natural gas (LNG) terminal in East China's Fujian Province within five years.

It will be China's second LNG terminal, following the US$600 million project in neighbouring Guangdong Province.

But Zhang said the Fujian terminal is likely to be smaller than the Guangdong one because the province is less developed and less able to consume this relatively more expensive form of fuel.

Commenting on PetroChina's withdrawing from its bid for Husky assets, Zhang said PetroChina was in the process of reviewing the Canadian company's offerings, and the high share price led PetroChina to drop its offer.

Husky's share has gained 16 per cent to 17.34 Canadian dollars (US$11.0) since February 19 when reports said the two companies were in talks for an asset sale, possibly worth US$4.4 billion. On that day, Husky's share closed up C$2.05 (US$1.3), or 13.7 per cent, at C$17 (US$10.8), its highest level since November.

Zhang declined to say what he considered to be a reasonable price.

PetroChina is looking to taking over foreign fields as its domestic resources are dwindling.

Early this month, the company said it would pay US$216 million to buy the Indonesian oil and gas fields of Oklahoma-based Devon Energy Corp as its first overseas purchase.

Asked about the ongoing reform in the power sector, Zhang said the detailed plan would be announced next month, including how to allocate the power generating assets of State Power of China, whose assets would be separated under the reform to form three or four new power generation groups.

The assets evaluation and establishment of the new power generation groups will be completed within this year, he said.

Zhang said the State would restrict the building of more power plants because China is not running short of electricity.

Source: China Daily

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