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Protests, Regulatory Review Hamper Planned Stock Listing of PetroChina

By Peter Wonacott and Eduardo Lachica

[The Wall Street Journal. February 12, 2000]

PetroChina Co. is set to unveil details of a massive privatization, even as its planned overseas stock listing is being hampered by a protracted regulatory review in the U.S. and a human-rights campaign that has already succeeded in turning off one major potential investor.

Those involved in taking the new oil company public will begin publishing detailed analyses of the company and testing investors' interest in small meetings as early as Wednesday, before embarking on an international roadshow either later this month or early March. That means PetroChina is starting to push its issue before the U.S. Securities and Exchange Commission has finished its review of the listing. The quiet sell job, which is legal in the U.S., underscores the company's eagerness to be listed there and in Hong Kong as quickly as possible.

One reason PetroChina wants a speedy listing is that it has pressing needs for the $5 billion in cash it hopes to raise on the New York and Hong Kong stock markets. PetroChina, which will rank as the world's fifth-largest oil company in terms of crude reserves, plans to expand oil operations, pay $15 billion in debt and support more than one million workers who are retiring or being laid off. PetroChina's bosses in Beijing are also eager to see the listing succeed because it would set the stage for other capital-hungry Chinese state companies to float stock to foreign investors.

Moving ahead with PetroChina's stock promotion may also help deflect negative publicity from an anti-investment campaign that has claimed at least one early victory. Criticism of the company by human-rights groups has caused the giant California Public Employees Retirement System, or Calpers, to lose interest, Calpers officials say.

After asking its investment advisers what they thought of investing in PetroChina, Calpers told the California legislature's audit committee that most "generally indicate that the company will not be considered as part of their investment strategy." One of Calpers's managers, Nomura Asset Management, said it wouldn't invest in PetroChina because its parent company, China National Petroleum Corp., or CNPC, is involved in a politically sensitive project in Sudan.

"Given the basic nature of public pension funds, and given Calpers' status as a public pension fund, we prefer to hold off on buying PetroChina," the Japanese firm said in its submission to the Sacramento-based fund.

Activists have sought to alert investors to CNPC's involvement in Sudan, a country subject to U.S. trade sanctions because of a poor human-rights record. In response to a letter from the U.S. Committee on Refugees, a Washington-based humanitarian organization, the SEC said it intends to "thoroughly review" PetroChina's registration statement to ensure that investors know exactly how the proceeds of the listing will be spent by the company.

Write to Peter Wonacott at peter.wonacott@awsj.com and Eduardo Lachica at eddie.lachica@wsj.com

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