Chinese oil float gushes

Chinese oil needs are expected to rise rapidly

Shares in China Oilfield Services gained as much as 14% on their debut in Hong Kong, as investors snapped up stakes in a major oil industry supplier to one of the world's fastest growing economies.

China Oilfield is the drilling services arm of China's largest offshore oil producer, China National Offshore Oil, and the sister company off Hong Kong-listed CNOOC, from which it earns more than 50% of its revenues.

It operates drilling rigs and marine support vessels in China.

The float raised HK$2.24bn (£181m; $287m), adding to the more than $20bn China has raised from privatisations in the past five years.

Shares traded as high as HK$1.92 before falling to be 11.9% up on their flotation price of HK$1.68.

CNOOC has been the best performer on Hong Kong's stock market this year, rising by 36%.

Flotation of stakes in the power, rail and aviation industry are still planned.

Strong growth

China Oilfield's successful float contrasts sharply with that of fixed-line operator China Telecom, which fell 2% when it debuted last week, as investors worried over regulatory risks and strong competition.

Up to 30% of China Oilfields' profits - it expects to make at least 354m yuan ($43m) in the financial year ending in December - will be paid in dividends, the prospectus said.

The Chinese government forecasts demand for oil to grow by about 4% annually over the next three years.

Local production could be further boosted as the country tries to reduce its dependence on Middle Eastern suppliers.

The float comes as Yukos oil, Russia second largest producer announced it would increase shipments to China by 25% in 2003.