05-11-07 PetroChina, China's largest oil and gas producer, replaced ExxonMobil as the world's largest listed company by market value as its share price surged 163 % to close at yuan 43.96 on its first day of trading on the Shanghai Stock Exchange.
The company's share price opened at yuan 48.6, almost tripling its IPO price of yuan 16.7, and ended the morning session at yuan 43.65.

By offering shares on the mainland, the company is trying to increase its crude oil production to match its refining capacity, said Zheng Yi, an analyst with Guangfa Securities.
The company's market value on the Shanghai bourse swelled to above the $ 1-tn mark, surging past ExxonMobil, valued at $ 487.7 bn. It is the first time a company has been valued at $ 1 tn.

The share offering would reduce the weight of bank and financial institution stocks to 30 % from 39 % and help increase that of industrial sectors such as power, coal and refining, said Wang Jing, an analyst with Orient Securities. PetroChina is the first of the country's three petrochemical giants, including Sinopec and the China National Offshore Oil Corp. (CNOOC), to be listed on overseas stock markets.
"Returning to the mainland's capital market has been our long-cherished wish," said Jiang Jiemin, president of PetroChina's parent company China National Petroleum Corporation (CNPC), "the mainland offering will give domestic investors opportunities to share the outcome of PetroChina's fast growth and help expand the company's business in the mainland," he added.

The return of the company would help drain excess liquidity on the domestic market and add weight to the industrial blue chips, which in turn would help maintain the stability of the domestic capital market, said a report released by Citic Securities.
PetroChina raised yuan 66.8 bn ($ 8.9 bn) in Shanghai by selling 4 bn A shares, or 2.18 % of its expanded share capital, in the world's biggest initial public offering (IPO) so far this year. Apart from the 4 bn A-shares issued in the publicoffering, the CNPC holds the other 158 bn A shares, 86.29 % of the total.

According to the company's prospectus, it will use yuan 6.84 bn and yuan 5.93 bn respectively to boost production capacity at its Changqing and Daqing oil fields. A total of yuan 1.5 bn will be used to build production facilities at Jidong field, the country's largest.
It also plans to invest yuan 17.5 bn to upgrade its Dushanzi oil refinery and ethylene facilities and yuan 6 bn in expanding an ethylene plant in Daqing, in northeast China. Daqing, one of China's largest oil fields, produced more than 43 mm tons of crude oil last year, accounting for almost 25 % of the nation's total. Changqing produced more than 10.5 mm tons of oil in 2006.

Jidong Nanpu Oilfield, the largest oil discovery by PetroChina in four decades, will have an annual output of 10 mm tons by 2012, according to the company's plan.
"The oil fields that PetroChina is putting money into will be China's major oil sources in the future," said Han Xuegong, anoil expert. China will be able to produce enough refined oil to meet domestic demand after the completion of more than 20 refining projects of at least 10 mm tons by 2010, according to the nation's medium and long-term plan for the oil refining industry.

The PetroChina IPO surpassed the yuan 66.58 bn ($ 8.88 bn) achieved by China Shenhua Energy Company, the country's largest coal producer, earlier in October. PetroChina began trading in Hong Kong and its American Depository Receipts were listed on the New York Stock Exchange in 2000. Its Hong Kong share price was HK$ 19.60. Citic Securities, UBS Securities and China International Capital Corp. are the main underwriters of the issue.
"The return of blue chips indicates an advance of service quality within the domestic capital markets," said Zhu Congjiu, general manager of the Shanghai Stock Exchange.

The A-share offering of China Railway Engineering, Asia's biggest railway and tunnel contractor, will be discussed by officials of China Securities Regulatory Commission (CSRC). If the offering is approved, the company could raise around $ 2 bn in Shanghai, according to company sources.
The stream of offerings had "frozen" a considerable amount of money as investors could have withheld their money to buy blue chips, said analysts.