Repsol, Sinopec make big oil find offshore Brazil

Oslo, Feb 27th 2012 - Spain's Repsol and China's Sinopec have made an oil discovery offshore Brazil that could be one of the biggest so far in the area and that boosted confidence that Angola's deepwater reserves may be abundant too.

The firms' Brazilian joint venture has struck oil in the Campos Basin off the coast of the Latin American country, it said on Monday.

"The well ... drilled into a hydrocarbons column of 500 metres, one of the thickest discovered in Brazil to date," Repsol said in a statement.

Brazil is at the centre of an oil boom, with majors flocking to Latin America's largest economy and its hydrocarbon reserves, considered among the biggest in the world.

Repsol did not provide an estimate for the size of the find, but one of its partners, Norway's Statoil, said it was a "high-impact" one: it could hold more than 250 million barrels of oil equivalent (boe) or provide 100 million boe net to Statoil.

One analyst said the discovery could be even bigger and had the potential to be an elephant when compared with a recent discovery made by Petrobras in the same area.

"Using the same ratio between the oil column size and the recoverable recourses, the estimated size of (the find) is in excess of 500 million boe," Teodor Sveen Nilsen, an analyst at Oslo-based firm Swedbank First Securities, wrote in a note to clients.


ANGOLA LOOKING PROMISING

The partners in the Brazilian discovery, called Pao de Acucar or Sugar Bread, are Repsol Sinopec Brasil, the well's operator with a 35 percent stake, Brazil's Petrobras with 30 percent and Statoil with 35 percent.

Repsol has a 60 percent stake in the Brazilian joint venture, while Sinopec holds 40 percent.

Shares in Repsol and Statoil were up 0.63 percent and 1.46 percent at 0949 GMT respectively, outperforming a flat European oil and gas index.

Nilsen said the find was worth at least 0.6 crown per Statoil share now and could be worth 1.0-1.2 crown per share were the find to be an elephant.

Statoil said the Brazilian find was the sixth high-impact find it had made over the past 12 months after it struck big offshore Tanzania, Brazil, in the North Sea and in the Arctic.

The find also confirmed the potential for finding large oil and gas resources on the other side of the South Atlantic Ocean, in Angola's offshore deepwater blocks, where the Norwegian firm believes it can make billion-barrel discoveries.

These areas were formed millions of years ago when the African and South American continents were still connected.

"This discovery ... improves our confidence in the recently acquired acreage position in the pre-salt Kwanza basin of Angola," Statoil's head of exploration, Tim Dodson, said in a statement.

Statoil holds two operatorships in the so-called "pre-salt" blocks off Angola and has stakes in three more. - Reuters

World Bank to China: Free up your economy or bust

A worker rides a bicycle at a Sinopec oil refinery in China. State owned enterprises, like Sinopec, account for roughly 40% of the country's GDP, according to estimates.

New York, February 27th, 2012 - The World Bank and a Chinese think tank have a stern warning for China's government: transition to a freer market system, or else face an economic crisis.

The "China 2030" report, released by the World Bank on Monday, recommends China enact reforms promoting a freer economy. Those reforms include a major overhaul turning China's powerful state-owned companies into commercial enterprises.

"China could postpone reforms and risk the possibility of an economic crisis in the future -- or it could implement reforms proactively. Clearly, the latter approach is preferable," the report said.

The report is compiled by the World Bank and the Development Research Center, a research group that reports directly to China's State Council. It encourages China to promote innovation, competition and entrepreneurship as means of economic growth, rather than allowing growth to be primarily government engineered.

The world's second-largest economy has been rising rapidly, averaging around 10% growth a year for the last three decades. Much of that momentum has come as China's rural population moves into the cities and as the government has funded massive infrastructure projects and retained a powerful influence over the country's biggest companies.

State-owned companies dominate China's banking, energy, telecom, health care and technology sectors. Overall, they account for about 40% of the country's gross domestic product, according to Andrew Szamosszegi and Cole Kyle, who have researched the topic for the U.S.-China Economic and Security Review Commission.

Their latest report to the commission puts it bluntly: The Chinese government has not "expressed an interest in becoming a bastion of free market capitalism."

Critics point out that China cannot maintain rapid growth under this system forever. Emerging economies tend to start slowing when their GDP reaches about $16,740 per capita, according to research by economists Barry Eichengreen of the University of California at Berkeley, Donghyun Park of the Asian Development Bank and Kwanho Shin of Korea University.

They suspect China will hit the slowdown point around 2015. The World Bank's report forecasts a similiar slowdown, predicting economic growth will gradually slow from an average of 8.6% in 2011-2015 to an average of 5% growth per year in 2026-2030.

"China's leaders have recognized that the country's growth model, which has been so successful for the past 30 years, will need to be changed to accommodate new challenges," World Bank Group President Robert Zoellick said in a statement.

The World Bank's report suggested China should separate "ownership from management" of state-owned enterprises and implement modern corporate governance practices, including appointment of senior management, public financial disclosures and external auditing.

In spinning off its state-owned companies, the report recommended the government should also consider establishing state asset management companies that would represent the government as a shareholder, but would "independently and professionally" manage and trade assets in financial markets.

China currently has four major asset management companies that it originally created to oversee bad loans spun off from its four major banks. They're 100% owned by the Chinese government. - CNNMoney.

BASF, Sinopec complete 2nd phase of Nanjing investment

Nanjing, January 15th, 2012 - German chemical giant BASF and China’s SINOPEC inaugurated the $1.4 billion second phase of their integrated petrochemical site in Nanjing, bringing crucial chemicals to the China market that will support the development of more sustainable local industries, The Company reported.

“Through this successful partnership, we are able to bring vital chemical products and solutions to China that will directly support local industries as they strive to meet the needs of a rapidly developing population,” said Martin Brudermuller, Vice Chairman of the Board of Executive Directors of BASF SE, responsible for Asia Pacific.

“At the same time we are also investing in advanced production technologies that themselves use less water, save energy and reduce emissions. The Nanjing site is a flagship example of our Verbund system, which achieves extremely efficient production and safety by clustering plants and re-using by-products,” he continued.

On the occasion of the inauguration ceremony, the partners also announced further plans for the expansion of the site. The second phase, inaugurated 10 January, includes expansions of existing plants and construction of new facilities. The site now has an integrated C4 complex comprised of a new butadiene extraction plant with a capacity of 130,000 metric tonnes per year; a new isobutene extraction plant with a capacity of 60,000 metric tons per year; a new plant for highly reactive polyisobutene with a capacity of 50,000 metric tons per year; and a new 2-propyl-heptanol plant with a capacity of 80,000 metric tonnes per year. - New Europe Online

Hong Kong, December 14th - Saudi Aramco, Sinopec and CNOOC are each in talks to buy a stake in Frac Tech International, according to sources, bringing in more global players to a U.S.-dominated push of hydraulic fracturing technology to tap huge new oil and gas resources.

The U.S. oilfield services firm, ahead of a planned public share sale next year, is looking at a $2.2 billion deal for a 30 percent stake, said two sources with knowledge of the matter who declined to be identified because the talks are private.

The sources also said on Wednesday that Frac Tech was in advanced talks with Saudi Aramco SDABO.UL, Spain's Repsol-YPF SA and Sinopec - as China Petroleum & Chemical Corp is known - to establish three separate fracking joint ventures in the Middle East, Argentina and China.

A stake in Frac Tech, which hired Barclays Plc's Barclays Capital to advise on the sale, would provide Aramco and China's CNOOC Ltd and Sinopec with a solid entry into "fracking," which is used extensively in North America to free trapped oil and natural gas.

"They believe there is a lot of shale potential in China and the Chinese just don't have the U.S. expertise," said Mike Breard, oil analyst at Hodges Capital in Dallas. "That would be the major reason for their interest in Frac Tech. They could help them frack the wells."

Drilling in unconventional formations like shale and tight sands was pioneered and perfected in the United States and is said to have unlocked 100 years' supply of natural gas. With shale basins scattered worldwide, some oil companies such as CNOOC have partnered with U.S. companies to gain know-how.

"The Saudis are actually looking at fracturing for oil development," said Kenneth Medlock, fellow in energy and resource economics at Rice University's James Baker Institute for Public Policy. "If the firms are able to deploy fracturing, it will enhance the resource that's available to the planet."

Fracking involves blasting water, sand and chemicals into wells at high pressures to crack the rock and allow oil and gas to flow up the well. In terms of pumping capacity, Frac Tech is No. 4 in the United States after Halliburton Co, Schlumberger Ltd and Baker Hughes Inc.

COME ONE, COME ALL

Frac Tech, 30 percent-owned by Chesapeake Energy Corp, is looking to sell 20 percent to 30 percent of itself, sources said, and may sell it to one party or divide it up.

Singapore sovereign wealth fund Temasek Holdings holds 40 percent of Frac Tech through Maju Investments.

Frac Tech aims to close a deal by the end of February, the sources said, ahead of a planned initial public offering targeted to raise $1.15 billion.

It has hired Bank of America Corp, Citigroup, Credit Suisse and Goldman Sachs Group Inc to underwrite the IPO, which is slated for the second half of 2012.

In November, Saudi Aramco's chief executive acknowledged that the use of fracking was set to shift the energy balance of power and U.S. dependence on Middle East oil.

Frac Tech, which helps exploration and production companies perform frack jobs, also produces equipment and materials and mines the sand used in the fracking process. The Fort Worth, Texas-based company is in early talks with three or four parties in Poland to establish a joint venture.

Each joint venture would need $500 million to $1 billion to capitalize, one source said, adding that Frac Tech would inject capital from its revenues without taking on additional debt.

The company generated $1.1 billion in revenue in the first half of 2011, up 143 percent from a year earlier. Adjusted earnings before interest, taxes, depreciation, and amortization jumped 178 percent to $453.5 million in the same period.

The sources said the IPO planned for next year is for 15 percent of the company and would value Frac Tech at around $9 billion, including debt of $1.5 billion.

Barclays, Sinopec and CNOOC declined to comment. Other companies mentioned either declined to comment or could not immediately be reached.

Temasek is not the only big Asian player already invested in Frac Tech. Another backer is private equity fund RRJ Capital, whose Senja Capital holds about 11 percent of the company. Cayman Islands-based fund Cowboy Investment, owned by sovereign wealth fund Korea Investment Corp, holds 7 percent. - Reuters

Sinopec buys 18 per cent of Chevron Indonesia deep-water project

Beijing, October 11th - Sinopec International Petroleum Exploration and Production Corp, a wholly-owned unit of state-owned Sinopec Group, has completed the purchase of an 18 percent stake in Chevron Corp's Indonesian deep-water project for $680 million, a Sinopec official told Reuters on Tuesday.

The move marks Sinopec Group's return to Indonesia after its withdrawal in 2006.

The deep-water project, located in the Kutei basin off East Kalimantan, included the Rapak, Ganal, and Makassar Strait blocks, with a water depth of between 550 and 1,900 meters, the official said, declining to be identified.

The project includes one under-producing oil field and five oil and gas fields that have yet to be developed. Remaining recoverable reserves total 15 million barrels of crude oil and 700 billion cubic feet of natural gas. The project was expected to have a peak 370 thousands metric tonnes of equity oil and 79 billion cubic feet of equity gas in 2016, Sinopec Group said in a statement on its website.

The deal signals a pick-up in M&A activity by Chinese energy companies seeking to secure energy supplies to power the country's booming economy.

Sinopec Group signed an agreement to buy Canadian oil and gas explorer Daylight Energy Ltd for C$2.2 billion ($2.1 billion) in cash earlier this month. - Reuters.

Sinopec Buys Canada’s Daylight for $2.1 Billion to Gain Shale-Gas Assets

Canada, October 11th, 2011 - China Petrochemical Corp., the nation’s biggest refiner, agreed to buy Daylight Energy Ltd. for C$2.2 billion (US$2.1 billion) in cash, gaining Canadian oil and shale-gas reserves in its largest acquisition this year.

The state-owned company known as Sinopec Group offered C$10.08 a share, Calgary-based Daylight said in a statement yesterday. That’s 70 percent higher than Daylight’s average price during the past 20 trading days and more than double the average 32 percent premium for comparable cash bids for North American energy explorers, data compiled by Bloomberg show.

The takeover would give the Beijing-based company access to more than 300,000 acres of land in areas rich with oil and natural gas, adding to its expansion outside Asia after falling crude prices made valuations attractive. Sinopec Group and Cnooc Ltd. are among Chinese companies that have bought almost $30 billion of Canadian assets in the past five years to meet energy demand in the world’s fastest-growing major economy and gain access to drilling methods to help unlock Asian resources.

“Sinopec made a number of oil-sands acquisitions, and this is probably the most gas they’ve acquired in western Canada,” Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co., said by telephone today.

The oil and gas industry accounts for the second-biggest volume of mergers worldwide this year after telecommunications, with $127 billion in transactions, Bloomberg data show.

Daylight’s Assets
Two other energy deals were announced today. Superior Energy Services Inc., a U.S.-based oilfield services provider, will pay $2.6 billion in cash and stock for Complete Production Services Inc. In Australia, Everyday Mining Services Ltd. said it will merge with Hughes Drilling Pty Ltd.

Daylight’s proven and probable reserves rose 46 percent to the equivalent of 174 million barrels of oil at the end of 2010, the company said March 1. Beveridge values Daylight’s reserves at $16.70 per barrel of oil equivalent, saying Sinopec Group is paying a “fair price” for those assets.

Sinopec Group will join rival China National Petroleum Corp. and Cnooc in seeking technology through partnerships as China, estimated to hold more gas trapped in shale rock than the U.S., opens new areas to exploration. The world’s biggest energy user, which currently doesn’t produce any shale gas commercially, has brought in foreign partners including Exxon Mobil Corp., Royal Dutch Shell Plc and Chevron Corp. to assess its potential.

Chinese Shale
China has an estimated 1,275 trillion cubic feet of technically recoverable shale gas, more than the estimated reserves in the United States and Canada combined, according to an April report by the U.S. Energy Information Administration.

The U.S. and Canada produced 26.2 trillion cubic feet of gas in 2009 compared with 2.9 trillion cubic feet in China, according to EIA data.

China Petroleum & Chemical Corp., Sinopec Group’s Hong Kong-listed unit, fell 4.4 percent to close at HK$7.16. Daylight closed at C$4.59 on Oct. 7 in Toronto. The company’s shares have declined 56 percent this year. Canadian markets were closed today because of a national holiday.

Collaboration with overseas companies will help boost the search for shale-gas resources, and “future growth will mainly come from unconventional gas,” Chairman Fu Chengyu said Aug. 30. China Petroleum finished drilling its first shale-gas well in Hubei province July 15, Sinopec Group said July 26. - Bloomberg

Sinopec discovers gas field

Shanghai, September 18th, 2011 - Energy giant Sinopec has discovered a natural gas field with nearly 160 billion cubic meters of proven reserves deposited close to 7 kilometers underground, a company subsidiary said yesterday.

The Yuanba gas field in Sichuan Province is the deepest gas field in marine strata found in China, with deposits as deep as 6,950 meters, according to Sichuan-based Sinopec Exploration Southern Company.

The field contains 159.25 billion cubic meters of reserves. Planned annual output will be 3.4 billion cubic meters by 2015, the company said.

Taking forecast reserves into account, total reserves at Yuanba could reach 828.6 billion cubic meters, said Guo Xusheng, general manager of the subsidiary company.

Sinopec discovered Puguang, the country's second-largest gas field, in Sichuan. Shanghai Daily

Sinopec heads list for 7 consecutive years

Shanghai, 5th September, 2011 - China Petrochemical Corp, or better known as Sinopec, with sales of US$309 billion, headed the nation's top 500 enterprises list for the seventh consecutive year in 2010, according to a ranking released over the weekend.

The company, known as Sinopec Group and the parent of listed Sinopec Corp, was followed by China National Petroleum Corp and the State Grid Corp of China, in a list released by the China Enterprise Confederation and the China Enterprise Directors Association.

The companies which made the top 10 are state giants from industries such as energy, telecom and banking.

In July, Fortune China magazine released a similar list, but that tracked listed firms only and companies which didn't have listed arms, like State Grid, were not included in its list.

The entry threshold for the top 500 Chinese companies climbed to 14.2 billion yuan of annual sales from 11 billion yuan in the previous year, according to the CEC/CEDA list.

Wang Jiming, vice president of the China Association of Enterprises, noted an improvement in innovation among the 500 companies.

The companies had contributed 220,000 patents, an increase of 21 percent from the year before. - Shanghai Daily

Taiwan firms plan US$4.5b China project

Taipei, 19th August, 2011 - A group of Taiwan firms have signed a contract to set up a US$4.5bil refinery complex in China, defying a ban against such projects imposed by the island's government, said officials and media said.

The group, led by Ho Tung Chemical, inked the investment agreement with the government of southeast China's Fujian province and with Sinopec, China's biggest petrochemical group, in Beijing on Tuesday.

The agreement was signed after Taiwan's government, citing environmental considerations, rejected a similar, controversial US$20bil project for a giant refinery and petrochemical complex in western Taiwan.

“Since the project has hit a snag, the government must find a way out for local petrochemical companies, or the companies will gradually disappear,” Ho Tung founder Chen Wu-hsiung told the Taipei-based Economic Daily News.

Local companies are still barred from investing in China's refinery industry and some high-tech sectors despite eased tensions following the election of Beijing-friendly politician Ma Ying-jeou as Taiwan president in 2008.

The planned venture, based in Fujian, will have capacity to refine an annual 16 million tonnes of oil and 1.2 million tonnes of ethylene, a key organic compound widely used in industry. - AFP - TheStar

Sinopec Hong Kong Lowers Oil Price

Hong Kong, 11th August – The Hong Kong subsidiary of Sinopec announced it lowered prices of gasoline and diesel by HK$0.1 and HK$0.18 per liter yesterday, reports the Beijing News. Premium gasoline, gasoline, and diesel prices in Hong Kong will be HK$17.34, HK$16.4, and HK$11.6 per liter after the price cut.

Shell Hong Kong also lowered its gasoline and diesel prices yesterday to the same level of Sinopec Hong Kong. Shell explained that its own price adjustment was a reaction to Singapore’s gasoline FOB price, the benchmark for oil prices in the Asia-Pacific region.

In light of the US debt ceiling crisis, international oil prices have tumbled for three straight trading sessions. However, domestic oil prices stood still due to a backward pricing system, the report said.

Sinopec announced yesterday that it will increase gasoline production to meet surging demand in the forthcoming peak season. - CapitalVue