(Bloomberg) — Kunlun Energy Co., a unit of China National Petroleum Corp., plans to sell upstream assets and may buy an LNG terminal from its parent as the company shifts focus to gas distribution, Chairman Huang Weihe said.
The company is seeking to sell international assets to its parent or to global oil majors, Huang told reporters in Hong Kong Thursday after Kunlun’s annual shareholder meeting. It’s actively looking for buyers and there is no timeline for the sale, he said.
“We’ve made it clear that we want to be a downstream-focused gas distributor in China, and we don’t feel like carrying upstream oil and gas assets will help us fulfill that goal,” Huang said.
Kunlun’s 2015 profit dropped to the lowest in 17 years in March following the drop in crude prices and because of impairments including foreign-exchange losses. PetroChina Co., CNPC’s flagship listed unit and the country’s biggest oil and gas producer, injected its wholly-owned unit PetroChina Kunlun Gas Co. into Kunlun in November to expand its business into city-gas sales and compete with rivals including China Gas Holdings Ltd. and ENN Energy Holdings Ltd.
Kunlun owns nine oil and gas producing assets in seven countries including China, Huang said. Those assets began to contribute negatively to Kunlun’s profit since crude prices started declining in mid-2014, he said.
The company is interested in buying an LNG terminal in Tangshan in northern China, from its parent, Huang said, without elaborating. Kunlun’s two LNG terminals in Jiangsu in eastern China and Liaoning in northeastern China have returned to profit this year from losing money in 2015, he said.
The company’s fourth gas pipeline linking Shaanxi and Beijing will be completed before 2017 and likely below the expected cost of $2.5 billion, the chairman said. Kunlun intends to keep its pipeline assets, a major profit contributor, unless told by the government otherwise, he said.
Kunlun shares gained 0.8 percent to HK$6.10 in Hong Kong by 1:14 p.m. Hong Kong time. The city’s benchmark Hang Seng Index fell 0.4 percent.
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