Sinopec Actively Seeking Overseas Investments
Last Update: 8/24/2009 7:24:18 AM
DOW JONES NEWSWIRES
HONG KONG (Dow Jones)--China Petroleum & Chemical Corp. (SNP), Asia's largest
refiner by capacity, said Monday that it is actively seeking overseas investments
in oil and gas resources as part of its new three-year plan to boost crude oil
and natural gas production.
The company, known as Sinopec Corp., is also considering buying Addax Petroleum
Corp. (AXC.T) from its parent, Chairman Su Shulin said in a press conference
Monday.
Su said Sinopec has set up a unit to review overseas acquisition opportunities -
including assets in Angola, Russia, Kazakhstan and Australia now held by its
parent, China Petrochemical Corp.
"We are studying assets which are already in production, and those which are
still in exploration. We are also interested in buying companies," Su said.
The company is also in talks to buy liquefied natural gas from the ExxonMobil-led
(XOM) LNG project in Papua New Guinea, he said without elaborating.
Beijing-based Sinopec got shareholder approval in May to amend a legal pact with
its parent that allows the blue-chip company to invest directly in overseas
upstream projects instead of leaving such acquisitions to the parent. Prior to
the amendment, the listed company was only allowed to operate domestically.
Sinopec's desire to seek oil and gas assets abroad comes as the company sets new
goals for growth in both upstream and crude oil refining operations.
The company said in a statement to the Shanghai Stock Exchange Monday that it
targets the refining of 202 million metric tons of crude oil in 2011, up 9.8%
from a target of 184 million tons set for 2009. Its domestic oil product sales
are forecast to reach 135 million tons in 2011.
It is also targeting annual domestic crude oil output at 43 million tons by 2011,
up from 42.4 million tons planned for this year, while its annual natural gas
output is targeted at 17 billion cubic meters, up sharply from 10 billion cubic
meters.
Sinopec, the biggest ethylene producer by output in China, said it aims to
produce 9.3 million tons of the chemical compound in 2011, up 36% from the 6.83
million tons planned for this year.
Capital expenditure for 2010 and 2011 will likely be CNY120 billion in each of
the two years, with most of the money to be spent on upstream exploration, Su
said. The 2009 capital expenditure budget is unchanged at CNY111.8 billion.
Chief Financial Officer Wang Xinhua said he expects international crude oil
prices to hover between $65 and $75 a barrel in the second half.
Sinopec said Sunday its first-half net profit more than quadrupled to CNY33.25
billion ($4.89 billion) from CNY7.68 billion, driven by higher fuel prices due to
China's more market-oriented fuel-pricing system.
The company said it expects its net profit for the first three quarters ending
Sept. 30 to rise more than 50% from the same period a year earlier, though it
didn't provide further details.
Analysts said they expect the company's 2009 profit to be boosted by a marked
turnaround in its refining operation, which incurred heavy losses last year
because domestic price caps meant the company couldn't raise prices in tandem
with higher global crude oil prices.
Citigroup raised Sinopec's target price Monday to HK$8.50 from HK$6.80, saying it
expects the company to maintain its good performance in the coming quarters
because of a recovery in domestic fuel demand.
"In our view, the most positive point in Sinopec's result was the strong
marketing division result, because the recovery in China's domestic fuel demand
should mean the higher margin and volumes seen in the second quarter should be
sustainable in coming quarters," the bank said in a research note.
Bank of America Merrill Lynch said Monday it expects Beijing to raise domestic
fuel prices by 10%-12% this week or in early September.
"If the refined product price adjustment is on time, and the adjustment properly
reflects the recent crude oil price rally, we should see a huge re-rating of
(Sinopec) stock," the bank said.
Beijing has adjusted domestic fuel prices five times this year. It last cut
gasoline and diesel prices by 3% in July, after raising prices 8%-10% in June
following a rebound in crude oil prices in the second quarter.
-By Yvonne Lee, Dow Jones Newswires; 852-2802-7002; yvonne.lee@dowjones.com
(END) Dow Jones Newswires
August 24, 2009 07:24 ET (11:24 GMT)
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