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

Sinopec Buys Indonesia Assets From Chevron

Indonesia, 3rd August - Sinopec subsidiary, Sinopec International Exploration and Production Corporation intends to acquire 18-percent stakes in Chevron’s three gas projects in Rapak, Ganal and the Makassar Strait in Indonesia, reports caijing.com.cn, citing a company filing. The acquisition has already won approval from the National Development and Reform Commission (NDRC).

The projects are expected to together have a gas production volume of 2.3 billion cubic meters between 2015 and 2016.

Sinopec previously spent $680 million yuan to participate in Chevron’s Gendalo-Gehem deep water gas project in Indonesia. - CapitalVue

Sinopec Adjusts HK Oil Price 3 Times In 3 Months

Hong Kong, 1st August – China Petroleum & Chemical Corporation (Sinopec) and Shell decided to increase fuel prices by 0.18 yuan per liter as a result of rise in international prices, reports yicai.com. The after-tax selling prices of two types of fuel hit HK$16.7 and HK$17.64, respectively.

Sinopec lowered its fuel prices twice in Hong Kong in May and July.

In mainland China, the National Development Reform (NDR) never made any adjustment after it raised its price twice, in February and April. - CapitalVue

Sinopec to build US$91mil lubricant plant in Singapore

Singapore, July 28th, 2011 - Sinopec Lubricants, a subsidiary of the world's second largest oil refiner, will build a US$91m lubricant plant in Singapore.

The facility at Tuas will be China Petroleum and Chemical Corporation's (Sinopec) first lubricant plant outside of China and is part of its efforts to establish its brand presence in Southeast Asia.

Sinopec may only be behind Exxon Mobil in the business globally but the Chinese company still has a long way to go in terms of brand recognition outside of the mainland.

Sinopec hopes that its lubricant plant in Tuas will help increase its sales in Australia, New Zealand and Southeast Asia.

The company said it will now also reap some measure of savings as it is now based closer to customers in these places.

Pei Wen Jun, general manager of Sinopec Lubricants Singapore, said: "Well, cost savings are one factor but the main point of being here is to provide a higher level of efficiency to our customers based here."

The company will begin operating the lubricant plant with a initial production capacity of 100,000 metric tons annually. The lubricant is destined for customers in the marine and automobile industries.

Sinopec said it expects that production may increase 50 per cent to 150,000 metric tons within three to five years of operation.

It is also open to the possibility of replicating its investment strategy around the region.

Mr Pei said: "We will track what is needed in the market and see how it develops to determine if we will make more investments in Southeast Asia."

While the Singapore plant will account for only five per cent of its total lubricant production, it sees the republic as a crucial step in its broader strategy to internationalise its brand presence.

The lubricant plant in Tuas is set to hire up to 80 new staff and will function as a regional hub, engaging in production, servicing and logistics for a variety of customers including those in the automobile and marine industries. - CNA

Beijing, June 10th, 2011 - PetroChina and Sinopec plan to increase the number of gas stations to enlarge their distribution networks, according to reports in the China Business News on Monday.

The paper said PetroChina will increase the number of its gas stations in Guizhou and Zhejiang provinces, and its rival, Sinopec, will build more in Chongqing, the Xinjiang Uygur autonomous region and Liaoning province.

A PetroChina official told China Daily that he has not been informed of the plan, but said it is normal for branch companies to build new gas stations to meet the growing demand from local markets.

"Our branch companies in the provinces are in charge of the wholesale and retailing," he said. "The new move totally depends on changes in the market."

In May, PetroChina signed a framework agreement with a local government to invest 1 billion yuan ($154 million) to build 40 more gas stations and upgrade the existing 20 in Tongren county, Guizhou province.

Three months earlier, the company signed an agreement with the local government of Zunyi in Guizhou to build 48 more gas stations and reconstruct distribution facilities including oil tanks and natural gas pipelines.

Sinopec, which holds a 70 percent share of the country's retail gas market, plans to build 500 gas stations during the 12th Five-Year Plan (2011-2015) period in the Xinjiang Uygur autonomous region.

Speaking on condition of anonymity, an industry analyst said the number of new gas stations to be built is not high, but is still significant because the overall arrangement will influence their future marketing.

One-third of the petroleum in Guizhou is produced at PetroChina's refineries, but the company's market share in Tongren county is less than 15 percent.

The increase in the number of gas stations is necessary for the company, said a second analyst, who declined to disclose his name.

The first analyst said the geographical spread of gas stations in developed areas is already mature enough to meet demand, so the companies are looking for opportunities in underdeveloped areas such as Xinjiang and Guizhou.

PetroChina had 17,996 gas stations nationwide by the end of 2010, 600 more than in 2009. Sinopec had 29,000 gas stations by the end of last year with an annual growth rate of 8 percent for newly built stations.

"In such a scenario, PetroChina wants to gain a greater share of the market with the support of local government in the core areas that Sinopec has not occupied," according to the first analyst, who added that both companies have strong logistics networks, so they will be able to register a satisfactory profit, despite fierce competition. - China Daily

Sinopec says losses at Chinese refineries pile up as they refine more

Singapore, June 9th, 2011 - Chinese refineries have been suffering as international crude oil prices have remained high this year, and state enterprises have had to ramp up production to make up for the lost output from private refineries, the country's largest refiner, China Petrochemical Corp, said Thursday.

"The more they refine, the more losses they suffer. This is the plight for the local refining industry," China Petrochemical Corp., or Sinopec Group, said in a report on its website.

Sinopec said this is a major contributing factor in local private refineries to slashing output or shutting down for maintenance. With run rates by Shandong refineries falling by 70%, refined product supply has shrunk drastically.

Local retail prices for refined products, which are regulated, have not caught up with higher crude prices, causing Chinese enterprises to suffer huge losses in the refining sector.

Front-month ICE Brent crude oil futures have risen by 23.1% since the start of the year till the end of May, whereas domestic retail prices for gasoline and diesel have only gone up around 9-10% through two price increases -- in February and April.

In addition, recent surges in international oil prices -- keeping topping margins under pressure -- have led Chinese private refineries to drop run rates to an average of 30% of capacity.

This has burdened oil giants Sinopec and PetroChina with the responsibility to continue directing most of their output to the domestic market to ensure a steady supply at the retail level.

PetroChina, the listed arm of China National Petroleum Corp., reported a loss of Yuan 6.13 billion ($946 million) from its refining business in the first three months of this year, while Sinopec's listed arm Sinopec Corp. recorded an operating loss of Yuan 576 million by its refining segment.

"In accordance with arrangements by the head office, Sinopec's Qilu refinery operated at full capacity to maintain supply of refined products to the local markets," Sinopec said.

The 15 million mt/year (301,233 b/d) Qilu refinery, based in east China's Zibo city, Shandong province, processed more than 30,000 mt/day (219,900 b/d) of crude oil in May, the report said.

In May, the refinery produced close to 30,000 mt more products than a year earlier, the report said, without providing actual production figures. - Platts

Sinopec taps Siemens for wastewater system

Anqing, China, May 27th, 2011 - Siemens Water Technologies will provide a system to treat wastewater at Sinopec Corp.’s Anqing refinery, in Anhui Province, China.

The Sinopec refinery discharges its treated wastewater into the Yangtze - the third largest river in the world and the largest in China. Preserving and maintaining this major waterway’s water quality and ecosystems is one of the Chinese government’s main environmental initiatives.

The complete wastewater treatment solution will include Siemens’ powdered activated carbon treatment (PACT) system, a Zimpro wet air regeneration (WAR) hydrothermal unit, and a Hydro-Clear sand filtration system.

The three-tier system will be used to treat salty and oily wastewater from refining and petrochemical production activities from existing and upgraded units. The wastewater needs to meet the Chinese specifications for surface discharge. The system will become operational in 2012.

The 1,000 m3/h Anqing system will help Sinopec discharge a cleaner effluent and also generate approximately 500 m3/h of reusable water. The refinery will reuse the water in its cooling tower system, which will help to further offset the strain on China’s surface water bodies.

To treat the refinery’s wastewater, Siemens will install a PACT system, which combines biological treatment and carbon adsorption into a single, synergistic treatment step to remove organics. The solids are pumped as slurry to the Zimpro WAR unit where the carbon is regenerated and biological solids are destroyed.

As it will generate virtually no sludge that requires landfill disposal or incineration, the WAR system will help to lower operating costs for the Anqing refinery’s wastewater treatment, said Siemens.

The Hydro-Clear filter system makes it possible to filter large volumes of water and return it to the cooling circuit, resulting in large savings in the amount of fresh water required and thus further reducing costs, the vendor also claimed. - The Engineer

Oil plunges 9% to USD100 per barrel

New York, 5th May, 2011 - Oil plunged nearly 9 percent to settle below US$100 per barrel. Investors who had ridden a months-long rally fled the market Thursday because of concerns about weakening demand for fuel in the U.S.

The decline of $9.44 per barrel, or 8.6 percent, brings the week's loss for oil to $14.13, or 12.4 percent. Other commodities like silver and cotton have plunged as well.

Oil rose 35 percent from mid-February through the end of April. As it climbed above $100, economists warned that high fuel prices were taking a toll on the U.S. economy. Gasoline demand starting falling in March as motorists paid more at the pump; that trend was reinforced by industry and government studies released this week. On Thursday, worries about the job market ahead of Friday's key employment report added to concerns about fuel demand.

"More and more people were saying that oil was just too high," said Michael Lynch, president of Strategic Energy & Economic Research. "That got a lot of investors ready to run for the door. That's what they're doing now."

A higher dollar also contributed to Thursday's sell-off. Benchmark West Texas Intermediate crude for June settled at $99.80 per barrel on the New York Mercantile Exchange. That's the lowest settlement since March 16. Oil last had a one-day percentage decline this big on April 20, 2009. Back then a barrel of oil cost less than half as much as it does now.

Analysts also said the lack of any terrorist retaliation of the killing of Osama bin Laden eased concerns about the safety of the world's oil fields.

Oil and other commodities have been on a roll since around Labor Day, when the Federal Reserve indicated it would take more steps to boost the U.S. economy. The Fed's announced a plan to buy back $600 billion in Treasury bonds. The move effectively lowered interest rates but also weakened the dollar and unleashed inflation fears. Investors poured that extra money into oil, precious and base metals and grains.

This year, uprisings in Libya and the Middle East gave a further lift to energy markets.

This week investors have reversed those bets on commodities and locked in profits.

The plunge in oil may be enough to keep pump prices from reaching a national average of $4 per gallon. Retail gasoline has surged 30 percent this year. It's risen for 44 consecutive days to $3.985 per gallon.

Fred Rozell, retail pricing director at Oil Price Information Service, a private research and consulting firm, said the national average probably won't get to $4 per gallon.

"I wouldn't be surprised if we dropped to about $3.50 by the middle of June," Rozell said.

Expensive fuel bills can crimp customers' spending habits. Earlier in the week, reports from MasterCard SpendingPulse and the Energy Department showed that Americans bought less gas in the final week of April.

On Thursday, some retailers warned that soaring gasoline prices are starting to cut into the spending power of lower-income customers who were already on tight budgets. Also, the government said that the number of people applying for unemployment benefits reached an eight-month high. Distress in the job market depresses gasoline demand, analysts say, because large numbers of Americans drive to work.

"Commuters are the bedrock of gasoline demand," Cameron Hanover analyst Peter Beutel said. When people lose jobs, "you're killing the best part of that demand - the part that will always be there as long as someone has a job."

Companies feel the squeeze of high oil prices as well. Four of the nation's top airlines combined to lose $1 billion in the first quarter, largely because of the high price of jet fuel.

Other energy futures fell sharply as well. Heating oil fell 25.61 cents to settle at $2.8869 per gallon and gasoline futures lost 22.71 cents to settle at $3.0954 per gallon. Natural gas gave up 31.3 cents to settle at $4.331 per 1,000 cubic feet.

In London, Brent crude lost $10.39 to settle at $110.80 per barrel on the ICE Futures exchange.

The U.S. dollar rose strongly against the euro Thursday after the European Central Bank's president declined to signal that interest rates would rise again next month. Oil, which is traded in dollars, tends to fall as the greenback rises and makes crude barrels more expensive for investors holding foreign money. - AP

Sinopec: Employee demoted over expensive drink

Guangdong, April 26th, 2011 - SINOPEC has demoted the general manager of its Guangdong branch, Lu Guangyu, after his excessive spending on alcohol sparked public uproar.

At Lu's request, the Guangdong company bought 1,176 bottles of drink worth 1.59 million yuan (US$243,604), out of line with company policy, in September last year, Sinopec said yesterday.

The company said it had also ordered Lu to pay back 131,100 yuan for alcohol that had already been drunk and fined him an unspecified sum.

The scandal surfaced on April 11 when photocopies of invoices for the drink were posted online. The post claimed the Guangdong branch's purchases included 50-year-old Kweichow Moutai and 1996 Chateau Lafite Rothschild.

Some of the Moutai, a Chinese spirit traditionally drunk at state banquets, cost almost 12,000 yuan a bottle.

News of the lavish spending spread quickly, triggering public anger and prompting Sinopec to send a team from its Beijing headquarters to the southern province to investigate.

The revelations also came at a time when the government had just raised fuel prices to record high levels, a move that benefited Sinopec, China's premier oil refiner, which had long been lobbying for higher prices to compensate for losses caused by the soaring price of crude oil.

Fu Chengyu, the newly appointed chairman of Sinopec, told a briefing in Beijing yesterday that the case had seriously harmed the company's image and he pledged to crack down on such spending.

Lu had resold some of the bottles in October, Sinopec said.

The Guangdong branch had earlier said the purchases had nothing to do with Lu personally but were part of the company's normal operations.

Sinopec is the state parent of listed Sinopec Corp. - Shanghai Daily

Perth, April 21st, 2011 - Oil giant Sinopec on Thursday signed China's second-largest gas purchase agreement, worth around $85 billion over 20 years by one estimate, in a deal that also gives it 15 percent of an Australian gas-export project.

Sinopec will pay $1.5 billion for the stake in the Australia Pacific liquefied natural gas (LNG) project, completing a preliminary deal agreed in February with project developers ConocoPhillips and Australia's Origin Energy.

ConocoPhillips and Origin announced the deal at a joint news conference overseen by Australian Resources Minister Martin Ferguson.

"Australia very shortly become the second-largest exporter of LNG in the world and we have effectively now got a very important new industry in Queensland," Ferguson said, referring to the northern state where the project is to be built.

Australia has around $200 billion in LNG projects on the drawing board. Much of their exports are destined for China, which is looking to lock in supplies to feed its rapid growth and cut its reliance on polluting coal energy.

Australia Pacific LNG will have initial capacity of 4.5 million tonnes per annum (mtpa) of LNG, eventually ramping up to 18 mtpa, and is expected to come online at the end of 2015.

Sinopec's deal to take at least 4.3 million mtpa could be worth around $85 billion if pricing is similar to that of recent coal-seam gas supply deals done by Australian gas firm Santos, said CLSA analyst Mark Samter.

The price of $1.5 billion for the 15 percent stake is also well above similar deals made recently-- state-run Korea Gas Corp paid just over $600 million in cash to buy a 15 percent stake from Australian energy firm Santos and Malaysia's Petronas.

The project holdings of Conoco and Origin are now 42.5 percent each following Sinopec's equity investment, and the joint venture partners are still aiming to make a final investment decision by mid-2011.

Origin Energy shares were placed on a trading halt on Thursday. Sinopec shares were up 0.9 percent in Hong Kong.

CHINESE DEMAND RAMPS UP

China aims to boost gas consumption to 10 percent of its total energy use by 2020 as it tries to reduce greenhouse gas emissions by cutting the use of dirtier burning coal. It has spent tens of billions of dollars buying into energy resources from Africa to Latin America.

Energy consultancy Wood Mackenzie has forecast China's LNG imports to rise five-fold to 46 million tonnes by 2020.

"This will help Sinopec diversify its natural gas supply and meet the rapidly increasing demand of customers in China. Sinopec continues looking for more cooperation opportunities in Australia," Zhang Yaocang, Vice President of Sinopec Group, said.

Sinopec's deal will be second only to China's first LNG import deal sealed in 2002 when China National Offshore Oil Corp (CNOOC) secured 3.7 mtpa of gas from Australia's Northwest Shelf project for 25 years.

The deal will also be Sinopec's first venture into foreign unconventional gas assets and moves Australia Pacific LNG one step closer to meeting its target of making a final investment decision this year.

Sinopec is building its first terminal in eastern Shandong, which will be fed from ExxonMobil's Papua New Guinea LNG project. The latest deal will enable Sinopec to accelerate work at the proposed 17 billion yuan terminal in the southern coastal city of Beihai in the Guangxi region, which is expected to open in 2014.

The Beihai terminal will have an initial capacity of 3 million tonnes per year, expandable to 5 mtpa by around 2015 when Australia Pacific LNG comes online. - Reuters

Sinopec to Join Petrobras at Offshore Blocks, Gabrielli Says

Beijing, April 11th, 2011 - China Petroleum & Chemical Corp. will team up with Petroleo Brasileiro SA to develop offshore areas of the Para-Maranhao basin in northern Brazil after negotiating for a year, Brazil’s state-run producer said.

Petrobras Chief Executive Officer Jose Sergio Gabrielli, speaking to reporters in Beijing today, declined to give the financial terms of the transaction.

Last year, Petrobras announced a preliminary agreement to sell stakes in two blocks, BM-PAMA-3 and BM-PAMA-4, to Sinopec. Sinopec is keen to expand its overseas oil and natural-gas operations, Sinopec President Wang Tianpu said March 28.

Beijing-based Sinopec agreed last October to pay $7.1 billion for a 40 percent stake in Repsol YPF SA’s exploration assets in Brazil’s offshore Campos, Santos and Espirito Santos basins.

Brazilian President Dilma Rousseff is in China on an official visit to boost trade and investment between the nations and will meet with President Hu Jintao tomorrow.

Petrobras is investing $224 billion in the five years through 2014, the largest spending plan of any oil company, to increase oil and gasoline output. - Bloomberg