Chinese energy behemoth PetroChina Co. Ltd. (PTR) announced that it has received approval from European Commission to acquire 50% stake in two refineries based in France and Scotland from British chemical group INEOS Group Holdings Plc.
The Commission concluded that the billion-dollar deal does not pose to significantly impede effective competition in the European Union. This transaction is also expected not to alter the competitive nature of the oil and gas market in the European Economic Area.
At the onset of this year, PetroChina signed a strategic co-operation agreement with INEOS Group to share refining and petrochemical technology and expertise. Per the terms of the deal, the Chinese refiner will co-own projects at the Lavera refinery in France and Grangemouth in Scotland, each having a daily oil processing capacity of about 210,000 barrels.
Through this diversification venture, PetroChina targets to expand its base in Europe and dilute the risk of operating within the walls of China. The company is also moving toward becoming a major international player, with activities in the prolific oil and gas shales across different continents.
PetroChina recently entered into an agreement with EnCana Corp. (ECA), Canada’s largest natural gas producer, to buy half of the latter’s prolific Cutbank Ridge shale natural gas assets in British Columbia and Alberta for approximately C$5.4 billion (U.S. $5.4 billion).
Headquartered in Beijing, PetroChina is involved in exploration, development, production and sale of crude oil and natural gas; refining, transportation, storage and marketing of petroleum products; manufacture and sale of chemical products; as well as transmission of natural gas, crude oil and refined products.
We are maintaining our long-term Outperform recommendation on the stock. PetroChina currently retains a Zacks #2 Rank, which translates into a short-term Buy rating.
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