July 8, 2020 / 7:27 AM / a month ago

China hires Morgan Stanley, Goldman Sachs to advise on pipeline asset transfers: sources

HONG KONG/BEIJING (REUTERS) - Top Chinese energy firms have mandated investment banks Morgan Stanley and Goldman Sachs to act as advisers for multi-billion dollar deals transferring oil and gas pipeline assets into a national energy infrastructure giant, four sources said.

FILE PHOTO: A worker walks past the logo of China National Offshore Oil Corporation (CNOOC) at its Nanshan liquefied natural gas (LNG) terminal in Hainan province, China September 24, 2019. REUTERS/Muyu Xu/File Photo

Overseen by a government vice premier, underlining the project’s importance for Beijing, Beijing aims to complete the asset transfers and start operation of the new entity - valued by industry analysts at more than $40 billion - by the end of September, oil industry officials said.

“The timetable is a moving target but the goal was to complete the (asset) merger by end of July,” one person with direct knowledge of the matter told Reuters.

China announced in late 2019 that it would establish a National Oil and Gas Pipeline Company by combining pipelines, storage facilities and natural gas receiving terminals operated by China National Petroleum Corp (CNPC), China Petrochemical Corp (Sinopec Group) and China National Offshore Oil Company (CNOOC).

The new entity - also known as PipeChina - was conceived by Beijing to provide oil and gas producers neutral access to energy infrastructure, and in so doing boost non-state investment in exploration of oil and gas.

Morgan Stanley has been selected to advise Sinopec, according to two sources with direct knowledge of the matter.

Goldman Sachs was selected for CNPC, two separate sources said.

It was not immediately clear if CNOOC had appointed an international adviser.

For the new pipeline group itself, China International Capital Corporation, or CICC, has been appointed as adviser, three separate sources said.

All of the people interviewed by Reuters requested anonymity because the matter was not public.

Sinopec declined to comment. PetroChina and CNOOC did not immediately comment.

On the banks side, Morgan Stanley declined to comment, as did Goldman and CICC.

According to some industry insiders, the transfer of some of the assets, such as the Shaanxi-Beijing gas trunk line project and natural gas receiving terminals that involve joint venture partners and minority stakeholders, may take longer to complete.

Reporting by Kane Wu and Julie Zhu in Hong Kong, and Zoey Zhang, Muyu Xu and Cheng Leng in Beijing; Additional reporting and writing by Chen Aizhu in Singapore; editing by Kenneth Maxwell and Jason Neely

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