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UPDATE 1-Sinopec sells 50 pct gas pipeline stake to China Life and SDIC unit
December 12, 2016 / 12:43 PM / 9 months ago

UPDATE 1-Sinopec sells 50 pct gas pipeline stake to China Life and SDIC unit

(Adds valuation and analyst quote)

BEIJING, Dec 12 (Reuters) - China’s Sinopec has sold a 50 percent stake in its Sichuan-East China gas pipeline to China Life Insurance and SDIC’s transportation business in a deal that values the asset at 45.6 billion yuan ($6.6 billion).

A Sinopec statement on Monday said that China Life Insurance paid 20 billion yuan for a 43.8 percent stake while SDIC’s transportation unit paid 2.8 billion yuan for 6 percent.

“The asset is fairly valued and the deal is a win-win for both parties” Nomura analyst Gordon Kwan said. “China Life is looking at a good long-term stable investment.”

Sinopec said the pipeline generated a first-half net profit of 1.17 billlion yuan on revenue of 2.6 billion yuan.

The sale comes four months after the country’s second-largest oil and gas group announced plans to divest half of its share of the pipeline in a move spurred by Beijing’s reform push to boost efficiency and increase infrastructure investment in cleaner fuels.

Sinopec has said that the proceeds will be used to expand the 2,200 km (1,370 miles) pipeline and build gas storage facilities. ($1 = 6.9115 Chinese yuan renminbi)

Reporting by Meng Meng and Aizhu Chen; Writing by Josephine Mason; Editing by Mark Potter and David Goodman

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