Why PetroChina's Recent Rally Is Just the Beginning

The global energy transition is reshaping the landscape of oil and gas demand, yet the resilience of fossil fuels-particularly natural gas-remains a critical factor in long-term energy security. For investors, this dynamic creates a unique opportunity in companies like PetroChina, which is not only navigating the transition but also capitalizing on undervalued fundamentals. As the world grapples with the dual pressures of decarbonization and energy affordability, PetroChina's strategic positioning and financial metrics suggest its recent stock rally is merely the prelude to a more substantial upward trajectory.

The Resilience of Energy Demand: A Tailwind for PetroChina

Global energy demand is far from collapsing, even as renewable energy adoption accelerates. According to the Global Energy Outlook 2025, solar and wind are projected to supply 37%–74% of global electricity by 2050, but this transition will not eliminate fossil fuels entirely. Natural gas, in particular, is expected to play a pivotal role in balancing intermittent renewables and powering hard-to-decarbonize sectors like industrial manufacturing and data centers.

PetroChina is aligning with this reality. The company's natural gas production in China's southwestern oil field surged to 40 billion cubic meters in 2023, with a target of 50 billion cubic meters by 2025, according to a Brand Finance report. This expansion directly supports China's energy security and regional economic growth, while its international gas supply chain in Asia and production rights in the Middle East and Africa further diversify its exposure. Meanwhile, the Deloitte 2025 Oil and Gas Industry Outlook highlights that natural gas demand could rise by 3 billion cubic feet per day by 2030 due to surging data center activity, a trend also noted in the Global Energy Outlook 2025. PetroChina's investments in infrastructure, such as the Matterhorn Express Pipeline, are poised to alleviate bottlenecks and unlock new revenue streams.

Undervaluation: A Contrarian Case for PetroChina

Despite its strategic advantages, PetroChina's stock remains attractively priced. As of October 2025, the company trades at a price-to-earnings (P/E) ratio of 7.5x, significantly below the Hong Kong Oil and Gas sector average of 9.3x, according to Simply Wall St. A discounted cash flow (DCF) analysis further suggests the stock is trading at a 31% discount to its intrinsic value, estimated at HK$10.06 per share. This undervaluation appears to stem from market skepticism about the oil and gas sector's long-term viability, despite PetroChina's robust financials.

The company's price-to-book (P/B) ratio of 0.77 also underscores its affordability, as it trades at a two-year low and a discount to its book value of HK$9.29 per share. This metric places PetroChina ahead of 64.69% of its industry peers, reflecting strong asset quality and capital efficiency. Meanwhile, PetroChina's free cash flow of CN¥149.7 billion in 2024-despite a projected decline to CN¥92.8 billion by 2035-demonstrates its ability to fund dividends and reinvestment.

Strategic Investments in the Energy Transition

PetroChina's resilience is not solely rooted in traditional hydrocarbons. The company is proactively diversifying into cleaner energy solutions, including hydrogen production, wind and solar power, and carbon capture, utilization, and storage (CCUS) technologies. These initiatives align with China's decarbonization goals and position PetroChina to benefit from policy-driven demand for low-carbon energy. For instance, its 2024 natural gas sales grew by 5.6%, contributing to a 25.5% operating profit increase-a testament to the sector's profitability amid market volatility.

Moreover, PetroChina's recent acquisition of three gas storage facilities for $5.59 billion underscores its commitment to enhancing energy infrastructure. Such investments not only secure long-term supply but also create operational synergies that could drive future earnings growth.

Conclusion: A Catalyst-Driven Outlook

PetroChina's recent stock rally reflects growing recognition of its strategic adaptability and undervalued fundamentals. However, the company's long-term potential is far from fully priced in. As global energy demand remains resilient-particularly for natural gas-and as the market reevaluates the role of oil and gas in the transition, PetroChina's disciplined capital allocation, expanding clean energy portfolio, and attractive valuation metrics position it for sustained outperformance. For investors seeking exposure to a company that balances traditional strengths with future-ready innovation, the case for PetroChina is compelling-and its rally is only just beginning.