BP's Takeover Prospects?

June 11th, 2010 - BP shares plummeted again today, down 11% in early trading, prompting fears that the company may fall prey to a takeover. The political firestorm surrounding BP led to a rollercoaster ride for the company's shares on stock exchanges yesterday.

Rumours the firm could consider bankruptcy protection vied with speculation it had become a bid target.

On Wall Street last night BP's New York-listed shares staged a 9.5% rebound on talk a rival could pounce. That followed a 16% rout the evening before.

Some investors now see the firm as a tempting target after it lost £55bn of value since the April 20 explosion on the Deepwater Horizon rig in the Gulf of Mexico, which killed 11 workers.

Shares have now shed 44% of their value since the disaster triggered the worst oil spill in American history. Yesterday the London-listed stock lost another 6.7% to trade at 365.5p a share, wiping another £5bn off the value of the group.

BP is determined to resist any overtures from opportunistic bidders and many Londonbased shareholders argue it would be madness to sell out when the stock is at such depressed levels. They insist they are optimistic about BP's capacity to rebound from the current crisis, arguing that its shares are now wildly undervalued.

One industry source said: 'BP will defend its independence. Any attempt to take it out at these (share price) levels or anything resembling them would be the height of opportunism.' However, some industry players believe Washington's political assault could ultimately destroy the firm.

As a result, there is talk the company could seek Chapter 11 bankruptcy protection in the US, offering BP some breathing space to sort out its affairs. A far more likely outcome is the suspension of the dividend, allowing the firm to conserve more cash to pay out spill-related claims.

US Department of Justice officials have said they are planning 'to take action' to make sure BP has enough cash to cover any compensation claims arising from the spill. This is also seen as a threat to the dividend, which has not been cut since 1992 and provides around £1 in every £6 of share payouts from UK blue-chip firms.

The company has so far refused to comment on the future of dividends, with the board due to make the decision at the end of July. One suggestion last night was that BP could impose a voluntary moritorium on payments as a way of holding out an olive branch to its US critics.

BP has said the cost of the clean-up and containment efforts had now hit £979m. Alternatively, BP could end up falling prey to a bid from deep-pocketed rivals. The firm's shares are now worth £68bn, compared with £123bn before the leak. This makes it far more digestible than it used to be.

Only a few global companies are seen as packing the firepower needed to digest a company of BP's size and complexity, however. Three more likely candidates are seen as ExxonMobil of the US, Anglo-Dutch giant Royal Dutch Shell, and Beijing-controlled PetroChina.

Yet none of these bids would be easy to pull off. Exxon has vast financial muscle and its American provenance will appeal to politicians who have been banging the anti-British drum. But Exxon's overlaps with BP's US business could trigger competition concerns.

Royal Dutch Shell is BP's closest European rival, and the two firms contemplated a tie-up under former BP boss Lord Browne. But Shell may decide it has enough on its plate without assuming vast Gulf liabilities.

This could leave outsiders such as state-owned PetroChina of China as potential bidders. PetroChina recently overtook Exxon as the world's most valuable company and it enjoys the backing of the Beijing state.

But the prospect of a British-owned firm with a huge American workforce being swallowed up by a Chinese-controlled one would be difficult to accept for jingoistic Washington politicians. - Extracted from Thisismoney.co.uk

SINOPEC Synthetic Lubricating Oils Used on "Beidou" Satellite

Beijing, June 4th, 2010 - The “Beidou” navigational satellite has got into the stage of building a network for frequent satellite launches.

At 23:53 on June 2, Beijing Time, China successfully launched the 4th “Beidou” navigational satellite into the pre-designated orbit with the “Long March 3C” carrier rocket at the Xichang Satellite Launch Center.

Both the carrier rocket and the navigational satellite used the synthetic lubricating oils exclusively developed and produced by SINOPEC Lubricant Company and the products used involved more than 10 categories.

With the smoothly advance of network building work, the “Beidou” satellite navigational system will possess the capacity to provide position, navigation, time and short message communication service in the Asia-Pacific region by 2012.

Currently, the “Beidou” satellite navigational system has been successfully applied in such fields as surveying and mapping, telecommunication, water conservancy, fishery, transportation, forest fire control, disaster relief and national security.

SINOPEC Lubricant Company will continue to develop and produce top-notch lubricant products and secure its leading position in the industry and international competition in the future to offer services including lubricating and sealing and oils for meters and instrument for Long March series carrier rockets and the “Beidou” navigational satellite and eventually support safe oils for the development of national military industry and space industry. - Sinolube.com

Beijing, June 11th, 2010 - The United Nations may have imposed a fourth round of sanctions on Iran, but it seems unlikely to deter companies from China – a permanent member of the UN Security Council that voted in favour of the measures – from strengthening their links with the Islamic republic.Indeed the international effort to isolate Iran is a multibillion-dollar opportunity for Chinese firms, as their rivals from nations more wary of President Mahmoud Ahmedinejad’s regime sever ties.

Links between Iran and China centre on energy, through China’s requirement for Iranian oil, and Iran’s need for foreign expertise to develop its vast, but heavily underutilised, reserves. Iran also requires petrol from Chinese petroleum companies as its own supplies remain inadequate. China has ensured that the UN sanctions passed have not affected its hydrocarbon trade with Iran.“Iran has become the engineer of China’s economic growth. It may not be like Saudi Arabia is to the US economy, but it’s close,” Ilan Berman, vice president of the American Foreign Policy Council, told the Washington Post.

Mr Berman made those comments in 2007, but they are now more relevant than ever as a string of major deals have deepened the interdependence of Iran and China.Among the foreign firms to have recently stepped back from Iran is Malaysia’s Petronas, which has ceased supplies of petrol, although the company said this was simply because there was no longer a requirement for it. Russia’s Lukoil and the Anglo-Dutch group Royal Dutch Shell have done likewise.

The Beijing-based Sinopec has been happy to take their place. In April it was revealed the company was sending a one-time shipment of 200,000 barrels of gasoline to Iran, while reports indicated that this month the company was sending a further 600,000 barrels. Sinopec did not respond to a request for confirmation of the shipments.According to one Beijing oil industry analyst, who asked not to be named, several reasons deter non-Chinese companies from doing business with Iran.

“I think there are a couple of reasons outside the sanctions. It’s not a stable government or country. You’re not sure what the Iranian government is going to do if you’re working there,” she said.“I [also] see a lot of trading companies saying they don’t want to supply Iran now. For them it’s a question of image and what public pressure they’re under.”For the likes of Sinopec and Petrochina, another firm with strong ties to Iran, these considerations are secondary. Under the ownership and control of the Chinese government, their main objective is to secure energy supplies.

“They have a very different approach to buying and selling and overseas acquisitions, and they have a very different perception of risk. There’s not the public pressure within China to pull out of Iran,” the analyst said.Iran will become “more and more dependent” on Chinese companies to develop its gas fields. The Islamic republic has the second-largest natural gas reserves behind Russia, but to date development of them has been so slow – partly a result of sanctions – that the country must import gas.

“Iran just doesn’t seem to have the technical capability nor the finance [to develop its gas fields],” the analyst added. “It needs a secondary player with both money and the technical expertise.”In June last year, the China National Petroleum Corporation secured a US$4.7 billion (Dh17.3bn) deal to develop part of the South Pars gas field. In doing so, it replaced the French company Total as the main contractor after it dithered amid the growing controversy surrounding Iran.

The field is, according to Iranian officials, due to produce an income of as much as $130bn per year, and it will further help China to secure its energy supplies. CNPC’s agreement to develop the field was reached with the National Iranian Oil Company, which had opened an office in Beijing a few months before the deal was signed.Only last month Iran placed an order with China for six liquid natural gas tankers, each worth between $200m and $220m, to export liquified natural gas from its territory.

The only thing that would deter the Chinese from further deepening their ties with Iran, commentators have suggested, is the possibility of an Israeli strike against the Islamic republic.Iran is the third-biggest supplier of crude oil to China, and also exports machinery and carpets to the world’s most populous nation.“In general I think China’s dependence on the Middle East is growing,” the analyst added. “You see refineries here upgrading so they can handle more Middle East crudes … I see more and more volumes coming from there.”

However, Dong Lisheng, a political analyst at the Chinese Academy of Social Sciences, said China had diversified its energy supplies through links with Latin America and Africa.Bilateral trade between Iran and China, worth $27bn last year, is set to grow to $50bn by 2015, according to the Iran-China Joint Chamber of Commerce.China has become the top supplier of heavy machinery to Iran, taking the place of Germany, and has been heavily involved in building and supplying rolling stock for the Tehran metro.

At the start of this year, the Beijing-based engineering company Norinco International Cooperation exported 14 locomotives to Iran, 18 months after agreeing to supply electric locomotives valued at $500m for the Tehran subway. Norinco declined to speak to The National about the deal. It was also reported last month in Iran that China had provided a $1.2bn loan to fund infrastructure projects in the capital. - The National

Santos May Sign LNG Deal With Sinopec, Analysts Say (Update 2)

Australia, June 11th, 2010 - Santos Ltd. may raise as much as A$1 billion ($850 million) selling a stake in its liquefied natural gas project in Australia, and China Petroleum & Chemical Corp. is a potential buyer, CLSA Asia-Pacific Markets said.

Santos, which is planning the Gladstone LNG venture in Queensland state with Petroliam Nasional Bhd., may sell as much as 19.9 percent of the development once uncertainty surrounding Australia’s proposed resource tax is resolved, Di Brookman, an analyst at CLSA in Sydney, said by telephone today.

Sinopec, as China Petroleum is known, is keen to invest in the Australian coal-seam gas industry after PetroChina Co. and Royal Dutch Shell Plc agreed in March to acquire Australia’s Arrow Energy Ltd. and China National Offshore Oil Corp. signed an accord to buy LNG from BG Group Plc’s Queensland venture.

“The Chinese are well known to be desirous of energy sources outside of China, and there’s no reason why Sinopec wouldn’t be interested,” said Adrian Loh, who covers Santos as associate director at DnB NOR ASA in Singapore.

Sinopec said last month it was in gas-supply discussions with Santos and Qatar. Santos is in talks with Sinopec, Asia’s biggest oil refiner, about the potential sale of a A$400 million project stake, the Australian newspaper said today. A Santos team was seen June 7 in a Brisbane hotel talking with Sinopec officials and advisers, according to the report.

Deal ‘Very Close’

Australia’s third-largest oil and gas producer said last month it was “very close” to announcing an additional customer for its coal-seam gas-to-LNG venture. The plan to impose a new tax on resource project profits had created uncertainty and delayed a development decision, the Adelaide-based producer said.

Santos is in “negotiations with a number of parties,” spokesman Matthew Doman said today, declining to comment further. Huang Wensheng, a spokesman for Beijing-based Sinopec, didn’t immediately answer calls to his mobile phone.

Santos rose 3.1 percent to A$13.50 in Sydney trading, while the benchmark S&P/ASX 200 Index gained 1.6 percent.

The gas producer may receive between A$750 million and A$1 billion for almost 20 percent of the LNG venture, assuming it gains clarity on the tax measure, Brookman said. Santos has said it now aims to make an investment decision on the venture later this year, as opposed to a prior mid-year target.

The government may change the plan for a 40 percent tax on resource “super profits” to bring the measure in line with an existing levy on offshore oil and gas ventures and remove the uncertainty hurting Queensland coal-seam gas projects proposed by Santos, Origin Energy Ltd. and BG Group, she said.

Santos ‘Needs Cash’

Signing up an Asian buyer would help Santos fund two LNG processing units at Gladstone, Brookman said. “They need some cash to develop this second train,” she said.
The Australian company is prepared to sell more than 9 percent of the venture as part of a fuel-supply agreement, Chief Executive Officer David Knox said in Brisbane last month.

Santos currently owns 60 percent of the proposed development, while Malaysia’s Petroliam Nasional, or Petronas, has the rest. Santos has agreed to sell 2 million tons of LNG a year to Petronas.

Before the tax measure was announced on May 2, Santos may have been as close as 24 hours away from signing up a buyer of gas from the Queensland development, Brookman said in a report. - Bloomberg

Santos in Talks with Sinopec About LNG Project (Update 1)

Australia, June 11th 2010 - Santos Ltd. is in talks with China Petroleum & Chemical Corp. about a potential A$400 million sale of a stake in its Queensland liquefied natural gas project, the Australian newspaper said.

A senior team from Santos, which owns 60 percent of the Gladstone LNG joint venture with Malaysia’s Petroliam Nasional Bhd, was seen June 7 in a Brisbane hotel holding talks with Sinopec and its advisers from Nomura Holdings Inc., the report said. - Bloomberg

Siemens To Award Certifications For Sinopec Transformer Oils

Beijing, May 14th, 2010 - The Germany-based Siemens gave technical certification to Sinopec lubricant company on May 10, 2010 confirming SINOPEC Transformer Oils N25 and N45 technical capabilities.

The N25 and N45 transformer oils are capable of being widely applied to all power transformers, generators, traction transformers, rectifiers and relevant machinery equipment including transformers with the voltage grade above 170kV as specified in Siemens Code TUN 901 293.

This is yet another milestone in the history of SINOPEC transformer oils, which won highest-level of technical certification from the world-famous Siemens soon after winning the Swedish ABB technical certification. - www.sinolube.com

(Above pic: Certificates of Siemens, world’s biggest electrical engineering and electronics company)