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)

PetroChina, Sinopec to pay RMB5 bilion a year more for new resources tax in Xinjian

Beijing, May 27th, 2010 - PetroChina and Sinopec, China's largest natural gas producers, will have to pay 5 billion yuan more annually for the new resources tax levied in Xinjiang province, China's largest gas tank.

The tax rate, at 5 percent ad valorem or a levy of 5 percent of the resources price, would force PetroChina and Sinopec to pay an extra of 3.6 billion yuan and 1.4 billion yuan respectively.

A research report from Goldman Sachs predicts that PetroChina and Sinopec's EPS during the 2010 to 2012 period would decrease by 4 percent and 1 to 2 percent respectively if the Xinjiang region imposes the new tax rate strictly. And if the new tax spreads to the whole country, PetroChina and Sinopec would have to see their 2012 EPS decline by 17 percent and 8 percent respectively.

Qiu Xiaofeng, an energy expert, estimates that if the new tax is extended to the whole country, PetroChina will have to pay an additional 20 billion yuan in tax annually. - Xinhua News Agency -

French oil major Total in talks with Sinochem, Sinopec on oil and gas cooperation

Beijing, May 20th, 2010 - French oil giant Total said Tuesday that the company is in talks with Sinochem Group on cooperation of jointly-funded oil service station at some major Chinese cities such as Beijing and Shanghai, foreign media reported.

Dow Jones Newswire quoted Jean Jacques Mosconi, Total's senior vice president, as saying that the company also held talks with China Petroleum and Chemical Corporation (Sinopec) on business opportunities over refinery joint venture in China.

Mosconi made the disclosure in the Global Refining Summit held in Dutch city Rotterdam on Tuesday, saying that the potential oil refining JV might feed on crude oil from the Middle East.
He said the Chinese oil market is large and fast-growing, but the attractiveness might be hurt by the country's strict government control over product oil pricing system.

China has adopted a more market-oriented product oil pricing mechanism since November 2009. But the oil companies still could not adjust the retail product oil price without government approval.

Sinopec, China's largest oil refiner, produced 113.68 million metric tonnes of product oil in 2009, up 5.9 percent year on year. Its total crude oil throughput stood at 182.62 million tonnes in 2009, up 6.7 percent over a year earlier.

Sinochem is one of China's largest chemical players and also a state-owned oil importer. In recent years, the company has also set foot on the oil and gas industry, both in upstream and downstream sector. - Xinhua News Agency

Sinopec to buy stake in Sonangol Sinopec International from parent

May 20th, 2010 - China Petroleum & Chemical Corp, which is Asia's largest oil refiner and is also known as Sinopec, on Tuesday said that it has secured approval from shareholders to acquire a 55% stake in Sonangol Sinopec International from its parent, China Petrochemical Corp, sources reported.

The deal will be Sinopec's first purchase of overseas upstream assets. In March, Sinopec said that it agreed to buy the stake for US$2.46 billion. Sonangol Sinopec International owns a 50% interest in Angolan deep water oil asset Block 18.

The block has two sections, an east section and a west section, and an average water depth of 1,500 meters. The east section started operation in October 2007 and has a production output of 240,000 barrels per day, while the west section is still under development.

Upon the completion of the deal, Sinopec's proven oil reserves will increase by 3.6%, or 102 million barrels, and its daily crude oil output will grow by 8.8%, or 72,520 barrels, the firm said earlier. - China Knowledge

Cnooc seals deal on Iraq oil field

Beijing, May 18th, 2010 - Cnooc Ltd., the Hong Kong-listed unit of China National Offshore Oil Corp. has partnered with the state-run Turkish Petroleum Corp. (TPAO) to win a contract with Iraq to develop the lucrative Missan oil-field in southern Iraq, marking Cnooc's first upstream access to Iraqi oil following its two major rivals, CNPC and Sinopec.

According to Cnooc, the 20-year contract includes an increase of Missan's production capacity to 450,000 barrels per day from the current 100,000 barrels a day within six years. Cnooc has agreed to price every additional barrel of oil produced after capacity rises by 10% at $2.30.

Cnooc will be the operator and hold 63.75% of the interest. TPAO will have 11.25% interest while an Iraqi drilling company will hold the remaining 25%.

Located 350 kilometers southeast from Baghdad, the Missan oil-field complex includes Fakka oil field, Buzurgan oil field and Abu Ghirab oil field. The estimated reserve of the complex is 2.5 billion barrels. The deal is still pending Iraqi government approval.

Cnooc started bidding for the Missan contract in June last year, partnering with Sinochem International Corp. The two companies proposed to increase production to 450,000 barrels a day and charge $21.40 per barrel, exceeding the Iraqi government's $2.30 proposal.

Last summer, the two sides held rounds of negotiations and the companies concluded to sell on the proposed price. However, Sinochem International later decided to withdraw from the deal without explanation. An industry analyst close to the company speculated that Sinochem was concerned with numerous risks associated with the deal.

Last week, Abdul Mahdy al-Ameedi, head of the Iraqi Oil Ministry's Petroleum Contracts and Licensing Directorate, announced that TPAO had joined the consortium with Cnooc.
The other two major Chinese oil companies, CNPC and Sinopec, have also gained a foothold in the Iraqi oil industry.

In November 2008, CNPC and China North Industries Corp. set up a joint venture and signed a 20-year development contract for Al-Ahdab Oilfield.

In June 2009, CNPC and BP jointly won the bid for a 20-year a technical service contract of Rumaila oil field. The companies plan to see a rise in Rumaila's oil production to 2.8 million barrels per day from 1.1 million, charging $2.00 per barrel.

In late 2009, CNPC setup a consortium with Total and Malaysia's Petronas to develop Halfava oil field by charging $1.40 per barrel.

Sinopec made its expansion in Iraq in August 2009, through the $7.24 billion purchase of the Swedish oil firm Addax, which has operations in Iraq. - Caixin Online

Sinopec Plans to Construct Large Oil Refinery Project in Singapore

April 19th, 2010 - Chinese oil giant Sinopec Corp plans to build a comprehensive petroleum and chemical base on Singapore's man-made Jurong island.

The move appears to be an attempt to make use of Singapore's geographical advantages in order to enhance Sinopec's oil refining capacity and expand the company's crude oil reserves.

The EO learned that the project includes space for storing crude oil reserves, an oil refinery and lubricant production base. The project still requires approval from Chinese regulators.

The official quoted above explained that Sinopec selected Singapore as its strategic base not simply because of the country's geographical advantage but also because of its strategic role in global oil trade.

On January 11th, China's National Development and Reform Commission (NDRC) announced that it had approved Sinopec's application to invest in the construction of a lubricant project in Singapore.

The Sinopec dubbed its lubricant investment as the "Golden Triangle Plan" and planned to carry it out in three steps. The first is to focus on developing the Asian-Pacific market, and then to establish factories overseas. The final step is to gradually establish global networks for distribution and after-sales service.

The construction of the base will lead to a greater presence of the Chinese petroleum giant in Southeast Asia.

Sinopec plans to develop markets in America, Europe, and Southeast Asia, the EO learned.
The company's lubricants has entered 40 countries and regions, with its sales overseas growing at an average annual rate of 45 percent.

In addition, the high prices that crude oil was fetching on the international market over recent years encouraged Sinopec to start planning to establish a base for its crude oil reserves quite early.

An industry expert said that another important reason for Sinopec to invest in the country was that Singapore is the international hub for oil futures trading and the largest fuel oil trading market in the world. The new base may also mean a greater role for Sinopec in the global crude oil futures trading. - Economic Observer

Sinopec oilsands deal could open up new fronts in environmental, labour battles

Calgary, April 19th, 2010 - The implications of China's first-ever investment in an established oilsands project will depend on what the emerging economic superpower ultimately plans to do with its new source of crude.

China's energy security was repeatedly cited by experts as the main reason state-owned refinery giant Sinopec is shelling out a rich US$4.65-billion for ConocoPhillips' nine per cent stake in Syncrude Canada Ltd., the largest oilsands project on earth and one of the oldest.

But it's not a foregone conclusion that barrels of oil squeezed from Syncrude's vast operations north of Fort McMurray, Alta., will literally cross the Pacific Ocean and end up in Chinese refineries. And even if that were the case, it's not clear whether China would want raw bitumen, or more a more processed and easier-to-refine variety of oil.

If China takes the bitumen route, it has the potential to draw the ire of Ottawa. On the federal election campaign trail in September 2008, Prime Minister Stephen Harper promised to restrict the export of the impure heavy crude to countries that have weaker greenhouse gas emissions rules than Canada, which would appear to include China.

"Clearly the government of Canada does have the ability to regulate exports in order to address environmental issues, be it either through a ban or some kind of tariff."

In any event, oilsands crude wouldn't be able to make its way to China until at least 2016, when Enbridge Inc.'s controversial Northern Gateway pipeline connecting Alberta to the northern port city of Kitimat, B.C., is set to come into service.

The wait wouldn't be much of a concern for China, which makes its decisions with an eye to its citizens' needs decades into the future.

Northern Gateway could also open up another front in a long-running battle to keep high-paying upgrading and refining jobs in Alberta, if Sinopec, Asia's largest refiner, opts to process its share of crude in its own facilities. Labour groups have already been raising alarm bells over the toll major U.S.-bound pipeline having on Alberta jobs.

University of Calgary business professor Bob Schulz said China has no interest in bringing oilsands crude to China, since oil is a globally traded commodity. Sinopec could swap its slice of Syncrude production on the world market for other supplies that are easier to bring home.
"It enables them to have a large asset in Canada that can be monetized and traded into oil for China," said Schulz.

"The Syncrude product is unlikely to go to China. The product is still going to go to the U.S."
Schulz said China is mainly interested in grabbing a seat at a table occupied by some of the globe's top energy companies, Syncrude partners like ExxonMobil Corp.'s subsidiary Imperial Oil Ltd. and Suncor Energy Inc., and benefit from their technical expertise.
The Chinese company could then apply that knowledge to other heavy oil operations in countries like Venezuela.

"What they'd like to do is to learn the technology in Canada, move that technology to other parts of the world where they're 100 per cent owners and they're not nine per cent owners." - The Canadian Press

Oil Product Price Adjusted

China, April 14th, 2010, - National Development and Reform Commission announced in the [Notice on the Adjustment of Oil Product Prices] issued on April 13, 2010, that the current prices of oil products will be adjusted.

By the Notice, the price for gasoline and diesel oil both will be increased by RMB 320/ton respectively from April 14, 2010 - Sinopec

Sinopec Group Completes $1.3 Billion Brazil Pipeline

April 7th, 2010 - China Petrochemical Corp., the nation's second-biggest energy producer, completed a $1.3 billion natural-gas pipeline in Brazil before a visit by Chinese President Hu Jintao seeking to deepen bilateral ties.

The 1,377-kilometer (856-mile) link is the company's largest overseas service contract, Sinopec Group, as China Petrochemical is known, said in a statement on its Web site yesterday. The pipeline goes through 72 cities and can transport 20 million cubic meters of gas a day, according to the statement.

China is expanding investment in Brazil's oil, mining and steel industries to meet rising demand in the world's fastest- growing major economy. During Hu's visit on April 15-16, Wuhan Iron & Steel Group will sign a contract with Brazilian port operator LLX Logistica SA to build a $4.7 billion steel plant, O Estado de S. Paulo reported on March 28.

Brazil and China may also announce a $10 billion loan agreement between Petroleo Brasileiro SA and China Development Bank Corp., the Sao Paulo-based newspaper said, without saying where it got the information.

Petrobras, as the Rio de Janeiro-based company is known, received $10 billion of loans from China last year to help finance the development of Tupi field, the largest oil discovery in the Americas in more than three decades.

In return, state-controlled Petrobras has been supplying oil to China, the world's second-biggest energy user and Brazil's leading trade partner in 2009.

Recent oil discoveries by Petrobras and OGX Petroleo e Gas Participacoes SA show that Brazil's petroleum fields are "virtually virgin," OGX Chairman Eike Batista said on March 31. - Bloomberg

Ecuador to Sign $500 Million Accord With Sinopec, Minister Says

March 31st, 2010 - China Petroleum & Chemical Corp., Asia’s largest refiner known as Sinopec, is about to sign an agreement with Ecuador to invest almost $500 million to develop an oil block, said the South American country’s Non-Renewable Resources Minister Germanico Pinto.

Pinto, who is also the president of the Organization of Petroleum Exporting Countries, declined to offer a timeframe for the investment in an interview today during an energy conference in Cancun, Mexico.

Ecuador said in November 2009 that Hong Kong-based Sinopec was interested in developing a block known as Oglan in the Ecuadorian Amazon. The amount of the company’s investment wasn’t announced at the time.

Ecuador is trying to boost oil revenue amid a $4.2 billion budget deficit this year. The country defaulted on $3.2 billion of international bonds in the past year and a half and is the smallest member of the Organization of Petroleum Exporting Countries, pumping 470,000 barrels of oil a day, according to Bloomberg estimates. “We’re going to keep output stable” around the 470,000 barrels of crude a day, Pinto said.

OPEC kept its production ceiling unchanged at 24.845 million barrels a day at a meeting March 17 in Vienna. It also didn’t change individual allocations. OPEC set the quotas at the end of 2008, amid the onset of the global economic recession. The group’s next scheduled meeting is Oct. 14.

Spain’s Repsol YPF SA, Brazilian state-controlled Petroleo Brasileiro SA and China’s Andes Petroleum Co. are the largest foreign oil companies operating in Ecuador. - Bloomberg