context: Additional pipeline asset divestiture is being rolled out, after the announced sale of Sinopec Yuji Pipeline a few days ago. This latest development which dilutes SASAC's (State-owned Assets Supervision and Administration Commission) stake to a mere 4.46 percent appears to contradict the previous market speculation that Pipe China will be controlled by SASAC to ensure its independence.
CNPC (China National Petroleum Corporation) and Sinopec announced acquisition agreements with Pipe China (China Oil and Gas Piping Network Corporation) on 23 Jul 2020. The agreement entails sales of pipeline network assets such as oil and gas pipelines, gas storage, and LNG (liquefied natural gas) stations to Pipe China in equity and cash
- CNPC will sell its assets for C¥268.7 bn, at a premium of 20.56 percent
- in return, it will obtain a stake of 29.9 percent in Pipe China, worth C¥149.5, and receive the rest in cash (C¥119.2bn)
- Sinopec will sell its pipeline infrastructure for C¥122.7 bn, at a premium of 41.89 percent
- it will receive a 14-percent stake in Pipe China, worth C¥70bn and the remaining in cash (C¥52.65bn)
- the agreements do not include pipelines from CNPC's Kunlun Energy Corporation
- the transfers will be completed by 30 September
A subsidiary of China National Offshore Oil Corporation will also obtain a 2.9-percent stake, worth C¥14.5 bn, as well as cash payment of an undisclosed amount.
Taken together, these transactions will boost Pipe China's registered capital to C¥500bn. 46.8 percent of the company will be owned by the three oil and gas SOEs, with the remaining 53.2 percent to be held by state shareholders including investment companies, National Council for Social Security Fund, China Insurance Investment and SASAC (State-owned Assets Supervision and Administration Commission).