Beijing: PetroChina, Asia's biggest company by market value, may report higher earnings after China raises gas prices and completes the world's longest pipeline for the fuel from Central Asia, Sanford Bernstein & Co. said.
China, which increased gas prices by 25 per cent in June, may initiate further reforms before "material" supplies of imported gas, Neil Beveridge, an analyst for Bernstein Research, said in a report yesterday.
"We expect that further gas price reform in the first half of 2011 will be a key catalyst for PetroChina in eliminating import losses and growing earnings from its domestic gas business," Beveridge said. Well-head gas prices may rise as much as 15 per cent next year in some areas to spur exploration, he wrote.
Turkmenistan has started supplying China with 500 million cubic feet a day of gas on a section of a $35 billion (Dh128.5 billion) pipeline that runs to Central China, with the link to Shanghai to be completed by the end of next year, Bernstein said.
The pipeline will supply three billion cubic feet a day, or about 20 per cent of the country's gas demand, in 2014, according to the report. With an annual transport capacity of 30 billion cubic metres, the 10,486-kilometre link, a third longer than the Great Wall of China, is double the size of the country's first West-to-East pipeline.
"As the Central Asian pipeline ramps up, PetroChina's gas production will grow by 15 per cent to 20 per cent compounded annually over the next three years to become a more material driver of earnings growth," Beveridge said. The link may contribute 18 billion yuan by 2012 in earnings, he said.
PetroChina fell 0.7 per cent to HK$8.58 in Hong Kong trading at 10am local time. The shares have dropped 7.1 per cent in the past 12 months, compared with the 1.3 per cent gain in the benchmark Hang Seng Index.
