PetroChina Co (中石油), the world’s second-largest company by market value, said it needs to raise 150 billion yuan (US$22 billion) in funds this year because tax payments may rise and cash flow has diminished.
Free cash flow, or the cash available for investing or financing after meeting certain expenses from operations, declined by 76.9 billion yuan last year because of tax payments and investments, the company said in a statement to the Shanghai stock exchange.
The oil producer had negative free cash flow of 44.9 billion yuan last year, according to the statement.
PetroChina plans to pay as much as US$1.4 billion for a stake in a Kazakh oil company to take advantage of lower commodity prices and expand overseas, chairman Jiang Jiemin (蔣潔敏) said on April 16. Parent China National Petroleum Corp (中石油集團) plans to sell as much as US$3 billion in bonds and may start issuing notes within two months, an industry association said on April 27.
“PetroChina still has a very healthy financial position as its debt-to-asset ratio is low,” Grace Liu (劉谷), an oil analyst at Guotai Junan Securities Hong Kong Ltd (國泰君安證券), said by telephone from Shenzhen. “It won’t be hard for them to borrow from banks.”
PetroChina faces “severe challenges” because the global financial crisis has lowered crude-oil prices and cut fuel and petrochemical demand since the second half of last year, according to the statement dated yesterday.
In order to conserve energy consumption, China, the world’s second-biggest oil user, increased the fuel consumption tax paid by refiners and importers eightfold, according to a statement on the government’s Web site on Dec. 19.
PetroChina’s fuel-consumption tax payment may jump by 71 billion yuan this year to 84.2 billion yuan because of the rate adjustment, the company said in the statement.
Shares of the oil producer fell 0.4 percent to HK$7.49 in Hong Kong at the midday break, compared with a 0.2 percent gain in the benchmark Hang Seng index.
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