Value of oil stockpiles plunges as crude oil prices drop
Oct-29-2014 By : fcccadmin
A drop in crude oil prices is adding a new challenge for China’s refiners – a plunge in the value of their stockpiles. They are already facing slowing economic growth and state controls on prices. A fall in crude prices should typically reduce expenditure and raise profits for refiners, but weak demand is driving down fuel prices and narrowing margins. China Petroleum & Chemical Corp (Sinopec) made about 9% of its revenue in the six months ended June 30 from processing crude oil. PetroChina had almost 8% of sales from refining operations. China National Petroleum Corp (CNPC), PetroChina’s parent, said it would have difficulty in meeting its profit targets this year because of crude oil’s slump, citing high stockpiles. It said it expected oil prices to decline further this quarter. Falling prices could “crush Asian refiners’ margins” if demand for oil remains weak, said Gordon Kwan, Nomura’s head of regional oil and gas research. UOB’s Hong Kong-based Analyst Yan Shi downgraded PetroChina’s stock to sell from buy and its target price to HKD7 from HKD11.60. She kept Sinopec at hold and cut its target price 11% to HKD6.60. Oil demand growth in China is expected this year to be the weakest since 1990 as economic growth slows, Sanford C Bernstein Analyst Oswald Clint wrote in a report.
Sinopec Star Petroleum to commercialize geothermal energy
By : fcccadmin
China Petrochemical Corp, China’s second-largest oil and gas producer, is seeking to commercialize geothermal energy after spending about CNY1 billion in the past few years to develop more than 10 pilot projects. Zhou Zongying, Researcher at Sinopec Star Petroleum – China Petrochemical’s geothermal energy development arm – said the renewable energy had good potential to partially replace coal-fired heat and electricity generation in big cities. China Petrochemical is the parent firm of China Petroleum & Chemical Corp (Sinopec). “So far, geothermal energy’s development has been limited by the high initial investment required, but as more local governments are imposing restrictions on coal-fired heat and power generation, geothermal energy will have more room for development,” Zhou said on the sidelines of the China Mining conference. Since July, Beijing has implemented tougher emission reduction requirements on coal-fired power plants that are similar to those in developed nations. Geothermal energy is expensive to develop, but Zhou said projects in locations with good resources were modestly profitable. The best geothermal resources are found in Tibet, Yunnan and Sichuan provinces.
China-Russia gas deal still to be signed
Oct-13-2014 By : fcccadmin
Russia’s Gazprom said an intergovernmental agreement with Beijing to seal a USD400 billion deal to supply gas to China through an eastern route had yet to be signed, although this could happen “in the nearest future”. Gazprom and the China National Petroleum Corp (CNPC) signed the deal to supply gas through a pipeline in May after a decade of painstaking talks. Russian President Vladimir Putin lauded the agreement as the biggest contract in the “history of the gas sector of the former USSR”. The deal now needs the signature of both governments to come into force. Some analysts and insiders have already expressed their doubts over the validity of the deal, saying that a final agreement on price had not been reached. Russia has announced gas deals with China several times, only for them to prove elusive. In 1997, for example, a USD7 billion deal was clinched to supply 25 billion cubic meters of gas a year to China but the project never materialized, the South China Morning Post reports.
Brightoil Petroleum reports net profit
Sep-29-2014 By : fcccadmin
Brightoil Petroleum (Holdings), which in July bought stakes in two China-producing offshore oilfields from United States oil firm Anadarko Petroleum for HKD8.35 billion, returned to the black with a lower loss on oil hedging activities and administrative expenses. The Shenzhen-based fuel trading and logistics firm had a net profit of HKD599.3 million in the 12 months to June 30, compared to a loss of HKD721.65 million in the previous year, it said in a filing to Hong Kong’s stock exchange. Revenue surged 52.4% year-on-year to HKD84.5 billion, primarily on a doubling of sales of petroleum products to HKD65.39 billion, thanks largely to a long-term crude oil supply contract with a Chinese oil company. Marine bunkering sales dropped 22.5% year-on-year to HKD17.68 billion. Brightoil is China’s only privately-owned supplier of fuel to ocean-going vessels. Operating profit from fuel trading and bunkering amounted to HKD964.23 million in the 12 months, a sharp turnaround from a loss of HKD478.19 million in the year-earlier period. Its marine transportation operation also turned in an operating profit of HKD55.5 million, compared to a loss of HKD134.9 million, as its oil tanker fleet capacity increased. Operating profit from oil and gas production grew 54.8% to HKD299.65 million, helped by higher gas prices, the South China Morning Post reports.
Sinopec sells 30% of its fuel distribution unit to 25 investors
Sep-22-2014 By : fcccadmin
China Petroleum & Chemical (Sinopec) saw its shares drop 6.8% following the news it agreed to sell 30% of its fuel distribution unit to 25 investors for CNY107 billion since a lack of big-name retailers in the buyers’ list raised question on the strategic value they would bring. Home appliance major Haier Electronics Group has agreed to buy 0.34% of Sinopec Sales and a firm controlled by China Huiyuan Juice Group’s parent will take a 0.84% stake. Both have agreed to cooperate with Sinopec on cross-selling and logistics. “With 25 firms participating, there will be questions as to the effectiveness of the consortium to drive reform, but it also highlights the broad appeal of this business,” said Sanford C. Bernstein Analyst Neil Beveridge. Separately, Sinopec Yizheng Chemical Fiber said it would sell all of its polyester products production operation to Sinopec and buy all of Sinopec Oilfield Service Corp for CNY24 billion by issuing shares. A Barclays research report said Sinopec Oilfield Service posted a net profit margin of 1% to 2% between 2011 and last year, much lower than the 7% to 15% at privately-owned firms.
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