PetroChina Focused on Gas Supplies

On increasing demand, PetroChina (PTR - Analyst Report) plans to increase the quantum of gas supply to Beijing. The company wants to double the gas supply in the pipeline to 12 billion cubic meters (Bcm) from the estimated current years’ figure of 6 Bcm.

Beijing is China’s third largest province in natural gas consumption ( it consumed about 5.6 Bcm of gas last year). There are still a few potential suburban areas in Beijing that lack access to piped natural gas. As more than 80% of China's natural gas is produced by the company, which runs most of the country's gas pipeline networks, it wants to capitalize this favorable supply opportunity.

In line with China’s efforts to increase clean energy usage to prevent air pollution, gas consumption in the Chinese capital has been growing in recent years. Natural gas is expected to be a key growth area for PetroChina. The company’s steadily growing natural gas volumes and investments in transportation assets provide for attractive long-term growth opportunities.

While we continue to believe that PetroChina should benefit from its leverage to the fast-growing Chinese market, we consider the market distorting fuel price caps and heavy taxes offsetting most of the positives. Our Neutral recommendation continues unchanged.

Read the full analyst report on PTR