PetroChina Co. Ltd. (ADR: PTR) said it hopes to raise as much as $22 billion (150 billion yuan) to fuel its expansion plans and pay its dividend.

The world’s second-largest company - which raised 50 billion yuan in the first quarter though bond issues and bank borrowing - plans to raise 100 billion yuan more by issuing more bonds, Bloomberg reported. That figure could be lower if the price of oil rebounds this year, but before the company takes action, it must get shareholder approval next week.

PetroChina originally earmarked 233 billion yuan for capital expenditure this year, but that was on expectations that domestic demand for oil would stay strong. Since then, the International Energy Agency said it expects China’s oil demand to fall 0.8% in 2009, a downward revision from its original forecast of a 0.6% contraction.

Falling oil prices and demand squeezed its revenue stream, causing a drop in free cash flow, which is the cash available after meeting operational expenses. PetroChina actually posted a negative free cash flow of 44.9 billion yuan last year, Bloomberg reported.

The state-controlled oil titan didn’t have an easy first quarter, either. Net profit fell 35% and revenue fell 30% from a year earlier. Its crude output fell 5.7% to 205.7 million billion barrels, made worse by the fact that the average selling price of its crude oil sunk 57.8% to $37.10 a barrel, The Wall Street Journal reported.

“We believe better times lie ahead as the first quarter marked the bottom of the earnings cycle for PetroChina,” Gordon Kwan, head of energy research at Mirae Assets, told the Journal. “China’s March oil imports and refinery throughput statistics suggested that fuel destocking is well underway amidst recovering fuel demand, thanks to the country’s economic stimulus measures.”

Projects in the Pipeline

PetroChina’s expansion should play a large part in China’s historic infrastructure stimulus.

Now, more than ever, it wants to scoop up assets and expand its reserves while prices are still suppressed by the global financial crisis.

Among the assets in PetroChina’s crosshairs, a 142 billion yuan pipeline from the northwestern Xinjiang province to the southern province of Guangdong in the south.

It also recently received government approval to invest $1.22 billion to expand its Hohhot refinery, which will more than triple the refinery’s production capacity from 30,000 barrels per day (bpd) to 100,000 bpd, Reuters reported.

Wang Jing, chief oil analyst with Orient Securities Ltd., told Bloomberg that adding and securing energy supplies is “politically important” for the world’s second-largest oil consumer. 

“Cash flow reduction is not going to jeopardize the company’s investment plans,” he said.