Sinopec’s profit soars; announces plans to boost oversea expansion

Sinopec’s (a.k.a China Petroleum & Chemical Corp.) net income rose at least tenfold to 22 billion yuan ($3.22 billion usd) in the second quarter according to this Bloomberg article.

The company has also announced it is planning a “rapid” overseas expansion in order to secure energy supply adequate to feed Chinese demand.

[Sinopec I passed on a bus ride to Shanxi, October – 2006]

The announcement, along with the company’s record gains in profit come as other global giants in the energy industry such as Royal Dutch Shell and Exxon Mobil have seen their earnings decline as prices plummeted and demand waned when the global slowdown ensued at the end of 2008.

According to Bloomberg, Sinopec supplies 80% of China’s fuel needs and is China’s largest refiner of crude oil. The company is looking for new foreign partners, expand its refining capacity and reduce operational costs. The company expects demand will remain strong in China and that oil prices will continue to rise throughout the second half of the year.

Here are a few highlights from the Bloomberg article, “Sinopec to Boost Expansion Abroad After Profit Surges to Record,” which you can access in full by clicking here.

“Sinopec’s main business is refining and it needs to increase its oil reserves and reduce its reliance on other oil producers,” said Larry Grace, an independent oil analyst based in Hong Kong. “There’s a government directive to increase overseas oil and gas assets.”

…

Sinopec gets almost all its revenue from refining and the sale and distribution of fuels. Oil production accounted for just over 2 percent of sales, according to its 2008 annual report. The company imports about 80 percent of the crude it processes.

…

Su said the company will accelerate its “go global” strategy.

Parent company China Petrochemical Corp. said on Aug. 18 it had concluded the C$8.3 billion ($7.7 billion) acquisition of Addax Petroleum Corp. to secure reserves in Iraq and Africa. China Petrochemical has assets in Russia, Angola, Ecuador, Australia, Canada, Kazakhstan and Myanmar.

Sinopec’s parent completed the purchase of Tanganyika Oil Co. for about $1.8 billion in December. Vancouver-based Tanganyika holds stakes in two Syrian production-sharing agreements covering the Oudeh and Tishrine/Sheikh Mansour blocks after expanding from Tanzania in 1996.

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Newswire: South-South Cooperation, China in focus

[China – Africa] — China’s New Silk Road shines in Africa
The word “China” has echoed in the meeting halls of the ongoing three-day World Economic Forum on Africa, reflecting the close attention to the Asian country which is widely regarded as Africa’s crucial partner in the strive against global economic crisis and future development.

The issues related to China have become hot topics in the platform which attracted over 800 participants from 50 countries and five African leaders in a bid to seek practical solutions to foster better business practices and greater investment across the continent, under the theme of “Implications of the Global Economic Crisis for Africa”.

[China – Africa] — ICBC chief says China to increase investment in Africa
Chief of China’s major bank ICBC, Jiang Jianqing, said on Thursday that he believes China will continue increasing investment in Africa which is mutually beneficial.

“With the development of economic globalization, China will have more and closer business links with the rest of the world, which will finally lead to increasing oversea investment from China. Therefore, I believe more investment with mutual benefits will come to Africa,” said Jiang in a joint interview with Jacko Maree, group chief executive of the Standard Bank Group.

[China – Afghanistan] — China, Afghanistan vow to advance bilateral partnership
The foreign ministers of China and Afghanistan met in Beijing Thursday and agreed to boost cooperation.

“China and Afghanistan are traditional friendly neighbors” who share mutual respect and support, said Chinese Foreign Minister Yang Jiechi in a meeting with Afghan Foreign Minister Rangin Dadfar Spanta.

[China – Kazakhstan] — Chinese parliamentary delegation visits Kazakhstan
A Chinese parliamentary delegation visited Kazakhstan from June 9 to June 12 at the invitation of the Kazakh parliament.

[China – North Korea] — Senior CPC leader calls on closer media co-op with ROK
Senior Chinese leader Li Changchun on Friday called on media organizations from China and the Republic of Korea (ROK) to offer more news reports that conducive to cementing bilateral strategic and cooperative partnership.

Hailing fruitful media cooperation between the two countries, Li hopes press organizations take the opportunity of the dialogue to set up a regular exchange mechanism, and provide more news reports and information that help boost Sino-ROK strategic and cooperative partnership.

[China – Pacific Island Countries] — Pacific parliamentary delegations to visit China
The five delegations will be led respectively by Isaac Figir, Speaker of the National Congress of the Federated States of Micronesia; Tu’ilakepa, Speaker of the Parliament of the Kingdom of Tonga; Manu Korovulavula, Chairman of the Public Accounts Committee in Fiji; Billy Talagi, Chairman of the Bills Committee of the Parliament of Niue and Lino Bulekuli Dit Sacsac, Clerk of the Parliament of the Republic of Vanuatu.

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Newswire: Commodities with a added bit of South-South Energy Cooperation

[Uranium] — India Bids for Stakes in Russian, Kazakh Uranium Mines to Fuel Reactors
Nuclear Power Corp. of India is bidding for stakes in uranium mines in Russia and Kazakhstan, and offered to build reactors in central Asia, Chief Executive Officer S.K. Jain said.

“We’re trying to achieve stakes in mines,” Jain said today in an interview at a Moscow nuclear forum organized by Rosatom Corp., the country’s nuclear holding company. The company is discussing buying into sites including the untapped Elkon deposit in Russia’s Far East, he added.

India, which suffers peak power shortages of as much as 17 percent, needs uranium to fuel 28 planned reactors and meet a target of adding 40,000 megawatts of nuclear generation by 2020. The second most-populous nation will seek an annual 1,500 metric tons of uranium for 60 years to fuel new reactors, Jain said.

“We’re exploring the possibility of a long-term partnership and not only for uranium supplies,” he said. India proposed building 220- to 500-megawatt reactors in Kazakhstan, which doesn’t yet have any nuclear power plants, he added.

[Crude Oil] — Crude Oil Advances as U.S. Consumer Confidence Increases, Equities Climb
Crude oil rose to a six-month high after a report showed that U.S. consumer confidence jumped to the highest level since September, signaling demand may rebound.

[Copper] — Copper Climbs in N.Y. as U.S. Consumer Sentiment Jumps Most in Six Years
Copper prices rose in New York and London after a report showed U.S. consumer sentiment jumped this month to the most positive since September.

[Gold] — Gold May Climb to Record $1,250, Standard Bank Says: Technical Analysis
Gold may target a record $1,250 an ounce as a continuation head-and-shoulders pattern may be forming within a longer-term trend, Standard Bank Group Ltd. said, citing trading patterns.

[Platinum, Palladium] — Platinum, Palladium Fall in New York on Weak Auto-Industry Demand Outlook
Platinum fell the most in two weeks in New York on concern that auto-industry demand for the metal will take longer to recover than other parts of the economy. Palladium futures also declined.

[Corn] — Corn Falls as Dry Spell Allows U.S. Farmers to Accelerate Delayed Planting
Corn fell, erasing an earlier gain, on speculation that Midwest farmers accelerated plantings delayed by rain, improving prospects for output in the U.S., the world’s largest exporter.

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