PetroChina to stay committed to LNG project despite accident

17 June 2009 09:43  [Source: ICIS news]

SINGAPORE (ICIS news)--State-owned oil and gas giant PetroChina is expected to remain committed to its liquefied natural gas (LNG) project despite setbacks from an accident that occured Tuesday morning, analysts said on Wednesday.

The skeletal steel reinforcement of an LNG tank, which is being built by the company at the Yangkuo Port, fell off, instantly killing two workers yesterday, based on a statement issued by provincial government of Jiangsu. Chinese state media Xinhua pegged the number of deaths from the accident at eight, with several others injured.

"We don’t believe this accident will derail the firm’s long-term gas strategy or the government’s full support for more environment [friendly] fuels and diversification away from oil and coal," said Gordon Kwan, head of Energy Research at Mirae Asset Securities.

PetroChina is building an LNG terminal at the Yangkuo port in eastern China, which is expected to be completed by April 2011. The project would have an annual LNG capacity of 6.5m tonnes or supply 8.7 billion cubic meters of gas, according to media reports.

The company has another LNG project at Dalian in northeastern China.

"The news [of the accident] triggered some panic selling this morning [Wednesday] and the stock has now fallen back to our recommended accumulation level of around Hong Kong dollar (HK$)8/share ($1.03/share)," Kwan said.

Investors should take the weakness in the share price as an opportunity to accumulate PetroChina stocks, analysts said, citing that the company’s long-term fundamentals remain strong.

"It was just an accident. It shouldn’t have any [negative] impact on earnings or the company’s outlook," said Wang Aochao, an investment analyst with brokerage, UOB Kay Hian.

UOB Kay Hian and Mirae Securities pegged PetroChina’s target stock price at $9.80/share.

PetroChina closed 1.26% lower at HK$8.65 in the Hong Kong stock exchange.

($1 = HK$7.75)

Judith Wang and Terence Teo contributed to this article

For more on PetroChina visit ICIS company intelligence
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By: Bohan Loh
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