PetroChina becomes world's first trillion dollar company

Chinese energy firm PetroChina became the world's largest firm by market value today as its worth soared to more than one trillion US dollars.

Shares in the company, which is China's largest oil and gas producer, almost tripled in value after it made its debut on the Shanghai stock market.

The buying frenzy among investors saw PetroChina overtake US oil group Exxon Mobil, which has a market value of $488bn (€337.1bn), to become the world's most valuable business.

Shares in PetroChina floated at 16.70 yuan (€1.55) each but surged to a close of 43.96 yuan (€4.07).

The company's one trillion dollar valuation comes after adding the value of PetroChina shares in Shanghai to those which have also been listed in Hong Kong and New York.

The rally by PetroChina shares comes during a sustained bull run for the Chinese stock market as the nation's booming economy has driven demand for shares by smaller investors.

Benchmark index the Shanghai Composite has more than doubled in value this year after a slew of listings by big-name Chinese companies, which has seen investors buy shares in a hope of higher returns than from bank savings.

Despite its record market value, PetroChina still lags behind its rivals in other measures.

When profit figures are compared, Exxon Mobil remains a much larger company, with its third-quarter profits of $9.41bn (€6.5bn) nearly matching PetroChina's net profit of $10.8bn (€7.46bn) for the first half of the year.

Meanwhile, Exxon's oil and gas reserves stood at 22.7 billion barrels by the end of 2006, compared with PetroChina's 20.5 billion barrels.

The Chinese company, which remains 86%-owned by the Chinese government, has seen revenues soar amid surging oil prices, but has struggled to boost production from its ageing domestic oil fields.

Currently all of the company's oil and gas reserves and production assets are based in China.

And the high price of PetroChina has again raised concerns that the Chinese stock market is developing into a potential bubble - which may eventually lead to a crash.

The company's shares in Hong Kong fell as some analysts speculated that it may be overvalued.

In February, shares across global stock exchanges fell sharply when the Chinese market suffered steep falls.

The rise in share prices subsequently saw the Chinese Securities Regulatory Commission this weekend order share-buying funds to avoid "blind expansion" or speculative activities.