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Sinopec JV eyes assets worth USD 3 billion
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Saturday, 30 Mar 2013

SINOPEC Corp, Asia's largest refiner, agreed to form a 50:50 joint venture with its parent to acquire USD 3 billion worth of overseas oil and gas assets from the latter to strengthen reserves and production.

According to a Sunday statement, chairman Mr Fu Chengyu is leading the asset injection drive, and the transaction will boost its profitability and facilitate its objective of becoming a more global oil company with significant oil and gas assets.

According to Sanford C Bernstein analysts, the joint venture will boost Sinopec's production by 4.2% and reserves by 3.2%.

Three upstream assets from Kazakhstan, Russia and Columbia will initially be injected into the joint venture.

Mirae Asset Securities analyst Gordon Kwan said that "Although the deal size is relatively small compared to Sinopec's market cap of USD 98 billion, we believe this upstream asset acquisition is one of many to come in the months ahead, and will certainly improve the overall profitability of the firm amid prevailing USD 100 plus oil prices.”

Sinopec's parent, China Petrochemical Corp, has spent nearly USD 40 billion in overseas oil and gas deals since 2010, gaining access to fields in Argentina, Russia, Canada, Iraq and West Africa.

Sinopec's only current overseas upstream asset is a stake in a deepwater oil field offshore Angola, which was acquired from its parent in 2010.

Source - silobreaker


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