Bloomberg: PetroChina Overtakes Shell as Shares Rise to Record (Update2)

By Ying Lou

Dec. 1 (Bloomberg) — PetroChina Co. overtook Royal Dutch Shell Plc to become the world’s second-largest oil company by market value after its shares rose to a record.

Shares of PetroChina climbed as much as 1.82 percent to HK$10.08 and were at HK$10 at 2:51 p.m., valuing the Beijing- based company at $230.2 billion. Royal Dutch Shell Plc had a market value of 116.8 billion pounds ($229.8 billion) at the close of trading in London yesterday.

The company’s shares have soared 58 percent in Hong Kong this year, reflecting increasing energy demand in the world’s fastest-growing major economy. China’s oil consumption has almost doubled in a decade, drawing investors to PetroChina and rivals China Petroleum & Chemical Corp. and Cnooc Ltd.

“We will be more used to news that some Chinese companies become global leaders, and market size and demand within China are the key drivers to help them get there,” said Lei Wang, co- portfolio manager for more than $9 billion at the Thornburg International Value Fund in Santa Fe, New Mexico. “There’s no surprise PetroChina overtook Shell.”

Exxon Mobil Corp., with a market value of $443.4 billion, is the world’s largest oil company. BP Plc, the fourth-largest, had a market value of $222.2 billion at the close of London trading yesterday.

Outpacing Shell, BP

PetroChina’s value has jumped as oil prices rise and the company expands output to satisfy demand in the largest energy market after the U.S. Third-quarter crude oil and natural gas production increased 7.9 percent to the equivalent of 260.7 million barrels (2.83 million barrels a day) of oil, the company said Oct. 16.

The company’s production is increasing at a faster pace than Shell and BP. Shell’s third-quarter production rose 3 percent from a year earlier to the equivalent of 3.25 million barrels of oil, the company said Oct. 26.

BP’s oil and gas output fell 0.2 percent to 3.82 million barrels a day from July to September, the company said Oct. 24. It was the fifth consecutive quarter in which BP’s production was lower than the year-earlier period.

PetroChina aims to expand its proven natural gas reserves by 300 billion cubic meters (10.6 trillion cubic feet) next year to meet rising demand for cleaner fuels, parent China National Petroleum Corp. said in a statement on its Web site yesterday.

PetroChina’s first-half profit rose 29 percent to a record 80.68 billion yuan ($10.3 billion) as sales surged 25 percent to 326.6 billion yuan, the company said Aug. 23.

Shares of Sinopec, as China Petroleum is known, have gained 63 percent this year. Cnooc has advanced 30 percent, more than the 27 percent increase in the city’s benchmark Hang Seng Index.

China will rely on imports for 77 percent of its oil needs by 2030, the International Energy Agency said Nov. 7, almost double the current level of about 40 percent. China’s oil consumption will rise 6.2 percent this year to 7.01 million barrels a day, the Paris-based IEA said in a Nov. 10 forecast.

China will consume more energy than the U.S. by 2030, according to a June report by the U.S. Department of Energy’s Energy Information Agency.

To contact the reporter on this story: Ying Lou in Hong Kong at [email protected] .

Last Updated: December 1, 2006 02:07 EST

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