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.

Read Full Post »

As promised… China steps up overseas investments in commodities

Aug 14, 2009 — State-owned Yanzhou Coal Mining Co. buys Australia’s Felix Resources Ltd. for about A$3.5 billion ($2.9 billion), reports Bloomberg

Aug 13, 2009 — Sinochem Corp., China’s biggest chemicals trader, makes an offer to buy to buy Emerald Energy Plc for 532 million pounds ($881 million). Giving Sinochem Corp., access to oil fields in Syria and Colombia, reports Bloomberg

“The Chinese don’t have enough nickel, don’t have enough oil, and they don’t have enough copper. There’s a crisis coming. They are going around the world buying up what they can. They’re preparing for a rainy day.” Jim Rogers, chairman of Rogers Holdings and the author of books including “Investment Biker” and “Adventure Capitalist”, said in a telephone interview yesterday.

Read Full Post »

Micro-Insurance

As the US struggles to recover its economic standing in the world, the doors of change will be wide open. For better or worse… The structure of the American-US insurance industry will change in the next 8 years.

Micro-Insurance always took a back seat in my personal interests in the world economic development theories and tools. However, as this article highlights, the sector is growing and innovative ways to offer insurance to poor people are being tested. If a individual is able to grow his/her business from the ground up on monthly loans of a mere $60-120, why too should not they experience the economic benefit of having a life insurance plan if they pay for it. Surely, life insurance will be cheaper developing countries.

Microfinance has exceeded the expectations of most skeptics. Why can’t Micro-Insurance do this too?

————————————-

PlaNet Finance to launch micro-insurance schemes

The UAE-based PlaNet Finance Group plans to introduce micro-insurance schemes in the region to reduce the impact of the crisis on micro entrepreneurs who have outstanding loans.

While the organised banking system has been severely hit by the financial crisis as individual and corporate customers fail to repay huge amounts of loans, the micro finance sector has been relatively unaffected. Even big insurance companies such as Allianz are interested in providing insurance to the poorest members of society.

Speaking to Emirates Business, Sawsen Ayari, Microfinance Expert and Programme Manager, PlaNet Finance UAE, said the agency is planning to expand its micro-insurance schemes across the Middle East and North Africa (Mena).

Through PlaNet Guarantee, a company specialised in the distribution of micro-insurance products, the group intends to spread micro-insurance facilities in several Mena countries. The company has a tie up with the global insurance company Allianz and successfully implemented a micro-insurance scheme in Egypt.

The current global financial crisis has created a situation to expand microfinance to other institutions in the region, Ayari said. The group is also working closely with leading pharmaceutical companies such as Pfizer.

Under PlaNet Finance’s tie up with Allianz, it is providing micro insurance schemes for the first time in Middle East in Egypt, where premium rates are as low as $1 and cover loans of $1,500 (Dh5,509) to $2,000 availed by micro entrepreneurs, Ayari said.

“The global financial crisis has not directly affected microfinance institutions because they operate in areas not directly linked to global finance. Some entrepreneurs in travel and tourism may be hit, but it will take some time before micro entrepreneurs in the region can be affected. Such insurance schemes will insure their loan repayment capacity.”

The group has microfinance institutions in Afghanistan, Egypt, Syria, Oman and Jordan.

Another company in the field, First Microfinance Foundation (FMF), successfully tested the first micro insurance scheme in the Mena region in Egypt, where it introduced credit life insurance to micro entrepreneurs. The FMF currently provides death and disability insurance to its clients.

Allianz Life Insurance covers the entire loan portfolio of the microfinance firm against a premium, which is paid upfront at each new loan disbursement.

Each new client is insured against death and disability, in case of which, the FMF gets 110 per cent of the initial loan amount and keeps the outstanding amounts to pay back the unpaid installments. The remaining balance is paid to the client’s family in case of death due to disease or accident or to the client in case of permanent total disability.

About 100 loan officers of FMF are trained on death and disability insurance for the benefit of the company’s 14,000 clients.

PlaNet Guarantee is targeted at people who do not have access to traditional insurance. Such clients also are not beneficiaries of social protection mechanisms to protect themselves against different risks such as health and natural catastrophes.

It works closely with the microfinance institutions that have strong presence on the ground. The company also works closely with insurance and reinsurance groups, health professionals and development agencies.

PlaNet Guarantee, which also acts as an insurance broker, works for the promotion of micro-insurance schemes around the world, with schemes running in 10 countries. It also provides consultancy service to microfinance institutions.

[Source] — Emirates Business 24/7

Read Full Post »