ExxonMobil and Gazprom have agreed to buy a fifteen percent stake each in PetroChina Co.'s cross- China natural gas pipeline, reducing the risk in the $5.6 billion project for Royal Dutch/Shell Group, the leading overseas partner.
Exxon, which is the world's largest publicly traded oil company, and Gazprom, the largest gas producer in the world, will have equal stakes with Shell in the four thousand kilometer pipeline, officials at Shell and Exxon said. Shell agreed in December to take a forty five percent stake. PetroChina, the country's top oil company, and its Chinese partners will hold the remaining fifty five percent.
China wants the pipeline as part of a four hundred and twenty billion yuan ($50.7 billion) plan to develop poorer western provinces such as Xinjiang, and to increase use of cleaner burning gas over coal, the country's main energy source. That has raised concern among some investors that the project is politically motivated rather than economic, and may be unprofitable for foreign partners.
“Having big name companies like Exxon and Shell onboard will help dispel fears among investors about this project's profitability,” said Eva Chu, an analyst with BNP Paribas Peregrine in Hong Kong. “It will ensure the pipeline is run efficiently after it's completed.”
The choice of the city of Helsinki is not incidental as the capital of Finland had hosted US-Soviet negotiations on the limitation of nuclear stockpiles in 1969