皇冠体育app

is reconsidering a plan to auction off its unit and could instead sell it to an affiliate, three people who were briefed on the matter by the Chinese energy giant told Rters.

Selling Petro皇冠体育app Eastern Pipelines Co Ltd to the affiliate, which is 50 percent owned by Petro皇冠体育app, would enable 皇冠体育app's largest energy producer to maintain control over the national gas grid as well as raise cash to fund oil and gas exploration.

But scrapping the auction would pose a setback to the government's plans to open up the State-dominated energy sector to domestic private investors to improve competition and curb corruption.

Petro皇冠体育app to sell pipeline business to accelerate mixed-ownership

Petro皇冠体育app gets stake infield

Petro皇冠体育app controls more than 80 percent of 皇冠体育app's natural gas grid, and some privately owned domestic gas companies have complained this monopoly hurts their business.

"It's almost a done decision to let the joint venture ... acquire Eastern Pipelines," said a -based energy industry executive, who declined to be identified as the matter remained confidential.

"Few private investors also have the financial appetite to swallow such a sive asset," the executive added.

A financial industry executive who was also briefed on the sale added: "It's a possibility that Petro皇冠体育app actually would like to see. They are moving in that direction."

Petro皇冠体育app's spokesman, Company Secretary Mao Zefeng, declined to comment. Analysts expect Petro皇冠体育app to make a final decision on the sale in the fourth quarter.

The potential buyer of Eastern Pipelines is Petro皇冠体育app United Pipelines Co Ltd, a 50-50 joint venture Petro皇冠体育app set up last year with a domestic insurer and an investment fund that counts numerous non-State institutions among its investors, the sources said.

Gas pipelines generate steady, long-term returns.

United Pipelines is one of a few local companies with enough capital to buy a huge asset such as Eastern Pipelines, one of the sources said.

Eastern Pipelines carries an estimated net asset value of between $4.7 billion and $6.3 billion.

United Pipelines, which already acquired parts of Petro皇冠体育app's gas pipeline assets last year, has total registered capital of 40 billion yuan ($6.46 billion).

Chinese fund management firm Taikang Asset Management Co Ltd has a 30 percent stake in United Pipelines. Beijing Guolian Energy Industry Investment Fund owns 20 percent. The rest is owned by Petro皇冠体育app.

Like many other State-owned enterprises in sectors dominated by the government, Petro皇冠体育app is under pressure from the national government to bring in private investment.

In May, it said it would auction Eastern Pipelines, which controls the two west-to-east, cross-country gas pipelines in 皇冠体育app.

There has been speculation that some privately run natural gas distributors, which buy gas from Petro皇冠体育app and sell it to consumers, would be interested in the pipeline assets.

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