Buffett to feel heat from PetroChina
Shares of PetroChina, the nation's biggest oil producer, rose as much as 16.37 per cent yesterday on news of a bigger than expected oil discovery in Bohai Bay.
The price surge is set to fuel demands that Warren Buffett, the world's third-richest man, sell the US$3.3 billion worth of shares in PetroChina held by his Berkshire Hathaway investment firm.
Protesters claim the investment lets Berkshire profit from the ties of PetroChina's parent company to Sudan, where the government has been accused of supporting genocide in its Darfur region.
PetroChina shares closed up 13.9 per cent yesterday at a four-month high of HK$10.16.
Berkshire holds its annual meeting today, when shareholder Judith Porter will call for it to divest its interest in the oil firm. Berkshire owns 1.3 per cent of PetroChina and is the largest shareholder after the mainland firm's parent, China National Petroleum Corp, which has 90 per cent.
Ms Porter owns US$36,000 of Berkshire B shares. Mr Buffett is the chairman of Berkshire and holds about a third of its stock.
CNPC led development of the first oilfield in Sudan and is the largest foreign oil company operating in the country. China is Sudan's main trading partner, buying more than 70 per cent of its exports, mostly oil.
Mao Zefeng, PetroChina's head of investor relations, said the company had no energy exploration or production facilities, investments or employees in Sudan, according to a Bloomberg report.
Mr Buffett put Ms Porter's resolution up for a vote even though the US Securities and Exchange Commission said the company was not required to. He dismissed Ms Porter's arguments as misguided, the Bloomberg report said.
At least 200,000 civilians have died in Sudan's Darfur region since 2003, according to the United Nations and Human Rights Watch.
PetroChina on Thursday said that it had discovered 1.02 billion tonnes, or 7.3 billion barrels, of oil reserves in Bohai Bay's Jidong Nanpu Oilfield, more than triple previous expectations. More than 40 per cent, 405 million tonnes or 2.96 billion barrels, are proven reserves of original oil. The new field is expected to be the country's second-largest, after the Daqing oilfield in northeast China.
'[The discovery] is the most exciting news in the country's oil exploration in more than 40 years,' Premier Wen Jiabao said during a visit to the oilfield on Tuesday.
Surging demand amid the booming economy has led China to become the world's second-largest oil importer and it is looking for resources both at home and overseas. The discovery would help PetroChina change from a company struggling to maintain oil production levels to the one with strong growth in the coming years, a Citigroup report said.
The field, expected to start production late next year, could deliver a daily production of as much as 220,000 barrels, which is about 10 per cent of the company's current oil production, a UBS report said.
Jidong oilfield, at Tangshan in Hebei province, covers 1,570 square kilometres, including 1,000 sqkm offshore and 570 sqkm onshore. The size of the reserve was expected to be 68 per cent the size of Daqing, the oil field on which PetroChina relied heavily, the Citigroup report said.
