The name PetroChina evokes images of enormous scale in the energy sector. It is China’s largest listed oil and gas company, the public arm of the state-owned China National Petroleum Corporation (CNPC), and a key pillar in China’s energy infrastructure.

Founded in November 1999 through the corporatisation of CNPC’s upstream and midstream assets, PetroChina has operated for more than two decades across upstream oil & gas exploration, refining, chemical production, and downstream distribution.

For investors, PetroChina offers a familiar trade-off: stable cash flow and a rich dividend yield, but with structural headwinds. In an era of energy transition, tighter environmental policy, and shifting demand patterns in China, the company finds itself at a crossroads. 

PetroChina initially listed its shares in a Hong Kong IPO in April, 2000 – a signal of China’s entry on to the world stage. Just seven years later it carried out an IPO on China’s A-shares market in Shanghai, raising a whopping US$8.9 billion in the process.

However, we know that traditional fossil fuels had a boom in the 2000s but the rise of renewables suggest long-term growth is petering out. 

Among the recent wave of developments – including a bold move into gas storage assets – suggests that PetroChina is attempting to adapt. But important questions remain. Let’s take a look at whether PetroChina is worth investors’ time and attention.

PetroChina’s interim results for 2025 paint a mixed picture. For Q3 2025 (the three months ended 30 September 2025), revenue reached RMB 719 billion, equating to a modest 2.3% year-on-year increase from the same period a year earlier.

But net income attributable to shareholders fell to RMB 42.3 billion, registering a 3.9% year-on-year decline.

More importantly, perhaps, operating cash flow for the first nine months of 2025 came in at RMB 343 billion, up 3.3% from the same period in 2024.

All this suggests that while profitability is under pressure, given weaker global crude prices and softer domestic refined product demand, PetroChina continues to generate reasonable amounts of cash flow. That cash flow underpins its ability to pay its dividend which, for many investors, is a key attraction.

Indeed, the company declared an interim dividend of RMB 0.22 per share for 2025. That translates to roughly RMB 40.3 billion in total interim dividends for shareholders.

Given its significant scale and integrated operations, PetroChina still delivers earnings and heaps of cash but the growth tailwinds appear muted under the current uncertain macro environment.

However, while its cash flow may be tied to the ups and down of oil markets, it has had a relatively resilient dividend in recent years. That was evident during the Covid-19 pandemic, when it did have to cut its full-year 2019 dividend by around 15%.

Yet for 2020, it raised its full-year dividend by over 300%, sharing profits with investors as oil prices rebounded on the back of a pickup in global growth.

PetroChina is making attempts to try to mitigate the volatile nature of oil prices, though.

In August 2025, PetroChina announced a major strategic move: the proposed acquisition of three natural-gas storage companies; Xinjiang Gas Storage, Xiangguosi Gas Storage and Liaohe Gas Storage.

This acquisition was from its parent CNPC, and the transaction was valued at roughly RMB 40 billion (US$5.6 billion).

Once completed, the acquisition will add about 10.97 billion cubic metres of working-gas storage capacity to PetroChina’s portfolio, which is a substantial addition. 

The company argues that this “gas storage + sales + production + transportation” integration will improve “peak-shaving and valley-filling” flexibility in China’s natural gas value chain, thereby enhancing the overall efficiency and stability of the business. 

The logic here is strategic and likely prescient. China has committed to reducing its dependence on coal, improving air quality, and promoting natural gas as a bridge fuel.

With natural-gas demand in China expected to rise substantially over the next few decades, building out mid- and downstream infrastructure, including storage, is going to be absolutely critical.

PetroChina’s move could place it well to benefit from that trend. In the context of softer crude oil prices and declining refined-product demand (especially amid electrification), the gas pivot might represent one of the company’s best shots at maintaining relevance for energy-focused investors over the next 10 to 20 years.

However, acquiring storage assets is not the same as creating high-margin growth. The gas storage business, while strategic, is capital-intensive and duration-heavy.

While the returns may be stable, the growth is likely modest and we won’t be seeing any “gangbuster numbers” in terms of revenue uplift.

Moreover, the acquisition values are being negotiated with the parent SOE (CNPC), raising questions about transparency and whether minority shareholders are truly getting “market-priced” deals or deals that are fair.

The bottom line? While the gas-storage move is strategically logical, it’s more of an “insurance” move on the franchise than a growth engine.

For many investors (particularly income-oriented ones), PetroChina’s appeal has always been the dividend. The interim 2025 dividend of RMB 0.22 per share reflects this.

Given the company’s cash flow and broad scale, the yield has often exceeded 6% and currently sits at around 6.2%.

Even during the Covid-19 pandemic years, PetroChina’s Hong Kong-listed shares still managed to deliver a dividend yield of around 5.5% to 6% for investors who stuck with the company. 

In a low-yield world, that’s a not-insignificant source of return. Even if earnings fluctuate, as long as cash flow remains solid and the state supports PetroChina’s role as a national energy provider, the dividend is likely to stay.

Added to that is the Chinese government’s overarching goal of getting corporates to be more generous with payouts to shareholders. PetroChina’s dividend payout ratio is at a reasonable 50% to 60% range of earnings per share (EPS).

Source: AAstocks. Note: dividend per share displayed in HKD for PetroChina’s H-shares (HKEX: 0857).

 Yet, the dividend is not a guarantee of future growth. The decline in upstream profitability, weaker refined product demand, and increased capex (especially for gas infrastructure and energy transition) may squeeze free cash flow over time. It’s certainly something that bears close monitoring.

If the company begins to prioritise long-term strategic investments – like gas storage, renewable energy, chemicals transition – then the dividend growth could stagnate or (even worse) the distribution could be cut.

The dividend yield is currently a strength but for investors, this depends heavily on the stability of cash flows and the state’s willingness to preserve shareholder returns amid structural changes in the global energy mix.

When you look at how the market values PetroChina relative to its peers, the differences are clear. PetroChina’s Hong Kong-listed shares currently trade at a trailing price-to-earnings (PE) ratio of around 10x, which reflects modest valuation expectations given its commodity exposure and legacy energy footprint.

By comparison, CNOOC (0883.HK), China’s offshore oil & gas specialist, sits at a lower trailing PE ratio of 7.4x, suggesting the market gives it slightly less earnings multiple than PetroChina despite stronger returns on capital during oil bull markets.

This can partly be explained by CNOOC’s more focused upstream production profile and less diversified business risk, which investors price conservatively when oil prices are weak.

On the other hand, Sinopec tends to command a higher valuation multiple, with a trailing PE ratio closer to 13.6x, reflecting its broader downstream refining and petrochemicals business. 

Refining and chemicals typically offer slightly more stable margins over time compared with upstream commodity swings, leading to a premium versus PetroChina. 

When you broaden the peer set beyond China’s borders to include global integrated oil majors, the valuation gap becomes even more pronounced. ExxonMobil (XOM), one of the largest US energy companies, currently trades with a trailing PE ratio in the mid-teens so around 16x to 17x earnings.

That multiple reflects the market’s view of Exxon’s diversified earnings base across upstream, downstream, and chemical segments, as well as its long track record of stable cash flow and disciplined capital allocation.

However, Singapore investors also have to contend with a smaller dividend yield of just 3.5% and the added disadvantage of the 30% dividend withholding tax on US-listed companies’ dividend payments.

In sum, PetroChina’s relatively low PE ratio, alongside a high dividend yield, suggests markets are pricing it more as a cash-generating, income-oriented holding than a growth engine.

PetroChina remains heavily invested in oil and we all know that is a commodity facing secular headwinds from global decarbonisation, rising EV adoption, and shifting energy policy.

While natural gas and storage investments mitigate some of that risk, they are far from a guaranteed path to high growth. The gas storage acquisition is better viewed as defensive (i.e. preserving the core business) rather than an aggressive bet on explosive growth in the new era of renewables.

Furthermore, as a subsidiary of CNPC, and with state control over 80%+ of shares, governance tends to prioritise national energy security and supply stability, rather than shareholder returns or efficiency.

This naturally dampens the kind of aggressive capital-allocation discipline that’s more common in private enterprises or Western energy peers (which aren’t state-owned).

As with any energy player, PetroChina is vulnerable to swings in global crude prices and domestic demand cycles.

As seen in 2025, falling crude prices have squeezed earnings despite steady production output and cash flow. Sustained low oil prices would continue to weigh on profitability.

To maintain long-term relevance, PetroChina will likely need to invest heavily in gas infrastructure, alternative energy, refining upgrades, and possibly a creditable renewables/chemicals transition.

That translates to increased capital expenditure (capex), which may reduce free cash flow and thereby pressure future dividends unless earnings recover strongly.

Despite these risks, for investors focused on yield and willing to accept limited growth, PetroChina remains a defensive holding in any portfolio. You just have to accept that total returns will likely come more from dividends than from capital appreciation.

PetroChina is not the kind of stock that promises high-growth, tech-style returns. It is a massive, legacy energy conglomerate and that comes with all the trade-offs that implies.

High dividend yield alongside moderate cash flow stability but structural headwinds in oil demand, commoditised business lines, and a governance model that prioritises state aims over shareholder returns.

That said, for investors who view equity partly as an income generator then it certainly remains a legitimate holding. The 2025 interim dividend and the company’s cash-flow resilience make that case somewhat compelling.

Buying PetroChina’s Hong Kong-listed shares directly can be a hassle for everyday investors in Singapore. You’d need access to the Hong Kong market and be prepared to purchase them in standard board lots of 2,000 shares — which works out to roughly HK$16,560, or around S$2,750 per lot at current prices.

But thanks to SGX’s Singapore Depository Receipts (SDRs) for Hong Kong-listed stocks, that barrier to entry becomes much more manageable. For PetroChina’s SDR — listed under the ticker HPCD — the underlying share ratio is 1:2, meaning every 1 SDR represents 2 PetroChina underlying shares in Hong Kong.

And because the minimum lot size for SDRs in Singapore is just 100 units, you can get started with as little as S$275 (based on Petrochina SDR’s latest price of $2.75), giving you exposure to PetroChina without needing to invest a large lump sum upfront.

These SDRs give investors a beneficial interest in the actual Hong Kong-listed shares, which are held by a custodian on behalf of the SDR issuer, who in turn holds them for you, the investor. That means no foreign brokerage accounts, no additional FX spreads, and no worries about navigating the complexities of overseas markets.

Another practical advantage? Dividends are paid out in Singapore dollars. For investors who are used to dealing with foreign holdings, this simplifies things by eliminating currency conversion fees or cross-border tax questions on small amounts. 

Finally, the SGX HK SDRs are fully fungible. That means you can convert your SDRs into the actual Hong Kong-listed PetroChina shares at any time through your broker. 

For Singapore-based investors looking to collect oil & gas dividends from a large Chinese energy player like PetroChina then the PetroChina SDRs make sense.

Tim has spent over 15 years in the finance industry with the likes of Schroders, The Motley Fool, and CGS International. 

He’s passionate about helping people take control of their finances by building wealth through long-term investing and thinking more coherently on all things "money".

Tim hopes to share the experience he’s garnered having worked in asset management, securities, and private wealth. He loves breaking down complex financial topics into content that’s easy to understand and, most importantly, engaging.

Give him a follow on YouTube @timtalksmoney, TikTok @timtalksmoneysg and Instagram @timtalksmoneysg or subscribe to his free weekly newsletter at TimTalksMoney.com for more money and investing insights.

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