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OPEC Decision Sends China Energy Shares Reeling

OPEC’s decision to maintain output amid falling oil prices sent shares in Chinese energy companies tumbling in November, overshadowing a second major agreement signed between Russia and China for more piped gas.

An Interfax portfolio of 36 gas companies listed on the Hong Kong, Shanghai and Shenzhen stock exchanges lost 1.18% between 3 and 28 November, outperformed by a 2.45% rise for the Standard & Poor’s 500, and greater than a 0.04% decline for the Hang Seng Index during the same period.

Shares in China Oilfield Services – a subsidiary of CNOOC – fell by 15.57%, with uncertainty over the upstream spending plans of its parent and other oil and gas players amid slumping crude prices.

Sinopec’s shares lost 7.74% following the announcement last week of investigations by the Central Commission for Discipline Inspection, China’s anti-corruption watchdog, into its state-owned parent Sinopec Group.

Shares in PetroChina fell by 14.3%, despite a second deal agreed between its parent China National Petroleum Corp. (CNPC) and Russia’s Gazprom for piped gas from Western Siberia (see China and Russia close in on second major pipeline deal, 10 November 2014.

Gazprom is expected to supply 30 billion cubic metres per year to CNPC from 2018 along a western route crossing the Chinese border in Xinjiang.

The new deal brings the total gas supplied by the eastern and western pipeline deals agreed this year to 68 bcm/y – equivalent to 42% of China’s current gas consumption and 19% of China’s forecast gas demand in 2020, according to figures from BOCOM International.

Meanwhile, shares in piped gas distributor China Gas Holdings rose by 3.18% after it agreed last week to buy fellow distributor Beijing Gas Development from state-owned conglomerate Beijing Enterprises Holdings.

(  interfaxenergy.com Edited by Topco)