China to see debut of first private petroleum fund

BEIJING (AFX) – Fifty Chinese private firms, headed by Tianfa Petroleum Co Ltd (SZA 000670), are setting up a one bln yuan fund that will invest in overseas oil and gas fields, an official with the parent of the listed firm said.
‘We have already launched a petroleum association, and are now planning a one bln yuan fund to be registered in Hong Kong or a third country,’ an official with Tianfa Group told XFN-Asia.
The fund, the first of its kind in the country, will initially focus on investing in oil and gas properties in the Middle East, and expand into other countries later, he said.

Shenzhen-traded Tianfa Petroleum secured a license to import crude and refined oil products from the commerce ministry earlier in the year, paving the way for the fund’s debut, he added.
The fund will enable private firms to invest in overseas petroleum properties for the first time. Such privilege are currently reserved for state-owned oil majors, such as top oil producer China National Petroleum Corp (CNPC), China’s largest refiner and second largest oil producer China Petroleum & Chemical Corp (Sinopec), and major offshore player China National Offshore Oil Corp (CNOOC).
China has been a net oil importer since 1993 and is now the world’s second-largest oil consumer after the US.
As domestic resources begin to dry up and demand rises on the back of a strong economy, CNPC, Sinopec and CNOOC are increasingly turning to overseas markets to feed the country’s ferocious appetite for oil.
All three state oil firms are engaged in oil and gas prospecting overseas or hold stakes in overseas properties, with CNPC alone involved in at least 44 oil-related projects abroad.
Industry analysts say the new petroleum fund signals further relaxation of government control over the strategic oil industry, and opens the door for more non-state funds to enter the sector.
Beijing has been moving toward a more liberal oil policy in recent years as it prepares to open up the retail oil products distribution market by Dec 11 and the wholesale market by the end of 2006 in accordance with its commitment to the World Trade Organization.
CNPC, Sinopec and CNOOC are expanding their areas of cooperation and exploration to boost output.
CNPC launched its offshore engineering arm last month, after securing the rights in July to explore for oil and gas in the South China Sea, previously off limits to both onshore oil firms.
Beijing has also allowed international oil giants, including BP PLC (LSE: BP.L – news – msgs) (NYSE BP) and Royal Dutch/Shell (NYSE RD), to set up joint venture gas stations in southern and eastern China, the most lucrative markets in the country.
(1 usd = 8.3 yuan)
Source: Yahoo News

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