Heavy snow and sleet struck central, south and east China hard in January and into February. The snowstorms severely disrupted transportation and logistics, causing restricted supplies of gasoline in affected areas. China Petrochemical Corp. (Sinopec Group), supplier of two thirds of the nation's auto fuel and the most important fuel supplier in south China, has exerted all its strength to ensure oil supplies.
According to the group, in January Sinopec imported 485,000 tons of refined oil, most of which was supplied to south China. At the same time, it also donated 14 million yuan ($1.96 million) to six affected provinces (autonomous region), including Guizhou, Hunan, Hubei, Jiangxi, Guangxi and Anhui.
The listed company, in which Sinopec Group owns a 75.84-percent stake, China Petroleum and Chemical Corp. (Sinopec Corp.), announced on January 21 that its crude oil output totaled 291.67 million barrels in 2007, up 2.27 percent from 2006. According to un-audited figures released by Sinopec, it also produced 283 billion cubic feet of natural gas in 2007, up 10.33 percent.
Sinopec Corp., Asia's largest oil refiner, processed 155.58 million tons of crude oil in 2007, a year-on-year increase of 6.33 percent. Gasoline output rose 7.35 percent to 24.69 million tons; diesel, up 3.84 percent to 60.08 million tons; kerosene, up 31.02 percent to 8.32 million tons; and light chemical feedstock, up 3.21 percent to 23.47 million tons.
Meanwhile, the group's output of ethylene, synthetic resins and synthetic rubbers rose by 6.02 percent, 12.08 percent and 19.76 percent, respectively, from 2006. Its total domestic sales of refined oil products rose 6.9 percent to 119.39 million tons in 2007.
According to the China Petroleum and Chemical Industry Association, China's oil output climbed to 186 million tons in 2007, and may increase to 189 million tons this year.
In accomplishing its strategic target to make itself a competitive international integrated petrochemical company, in recent years Sinopec Group has tightened up cooperation with top transnationals such as ExxonMobil, Shell, BASF and BP, introducing international capital, technology and advanced management expertise. Sinopec Group has become the largest chemical company in Asia, the fourth largest oil refiner and the sixth largest ethane producer in the world, and the second largest crude oil producer in China.
At the same time, Sinopec Group has strengthened its efforts in joint stock reform, adding quality assets to the listed company and collecting funds via both domestic and international capital markets.
In January, Sinopec Corp. declared its intention to acquire equity interests in three oil refineries and 63 petrol stations from its parent Sinopec Group to boost refined oil sales. The company has signed an agreement with its parent to purchase the Sinopec Hangzhou Oil Refinery Plant, and take a 59.5-percent stake in Yangzhou Petrochemical Plant and a 75-percent interest under a joint venture contract with Zhanjiang Dongxing Petrochemical Co. Ltd., according to a recent Sinopec Corp. statement. Sinopec Corp. will also acquire the operating rights for 63 petrol stations from Sinopec Sales and Industrial Co., a wholly owned subsidiary of Sinopec Group.
Under another agreement, Sinopec Yangzi Petrochemical, a subsidiary wholly owned by Sinopec Corp., entered into two equity transfer agreements with Sinopec Group to buy Taizhou Petrochemical and Qingjiang Petrochemical.
These acquisitions, valued at 3.66 billion yuan ($511.89 million), are to be paid for with resources from Sinopec Corp. and Sinopec Yangzi Petrochemical. "The deal will further improve the company's refined oil retail network and enhance its refined oil sales capability," Sinopec Corp. said in a statement.
The five refineries have a total annual capacity of 8 million tons, the statement said. The proposed transactions need approval from the State-Owned Assets Supervision and Administration Commission and other authorities, it stated.
Sinopec Corp. recently sold bonds valued at 30 billion yuan ($4.2 billion) to help finance a cross-country pipeline and new ethylene plants. It began selling six-year bonds with warrants on February 20, the company said in a statement issued to the Hong Kong Stock Exchange, because it needs capital to fund its budget, which is projected to increase 38 percent over last year due to the surge in energy demand in China.
Sinopec's planned pipeline will transport natural gas from the southwestern province of Sichuan to Shanghai, the company said. The oil giant is also building two ethylene plants, each with a capacity of 1 million metric tons a year, in the cities of Tianjin and Zhenhai, as well as another ethylene plant in Wuhan.
The company will issue 300 million bonds incorporating warrants that can be converted into Shanghai-traded stock at a ratio of one share for every two warrants.