HONG KONG - Piped-gas supplier China Gas Holdings said on Wednesday that PetroChina is in talks to invest in a China Gas unit, which will distribute liquefied petroleum gas (LPG) for Asia's top oil producer.

China Gas chief financial officer Eric Leung said the company and PetroChina would soon conclude a business tie-up under which China Gas unit Shanghai Zhongyou Energy Holdings Co Ltd would distribute LPG for PetroChina.

PetroChina processed a total of 6 million tonnes of LPG per year at 28 refineries owned by unit CNPC Kunlun Natural Gas Co Ltd, Leung told Reuters in an interview.

China Gas expected Beijing to announce a reform of natural gas prices by the end of 2009, which would link natural gas prices with those for crude oil, Leung said.

He said natural gas prices in China would catch up with international prices, rising 10-12 percent per year over the next five years. (Reporting by Alison Lui; Writing by Alison Leung; Editing by Chris Lewis)