Sinopec embraces reform amid China push for private capital

MOSCOW (MRC) -- Sinopec, Asia’s biggest refiner, said it will push ahead this year with a government-driven agenda to open up state-controlled industries, as China’s energy companies search for private capital, reported Bloomberg.

The company and domestic peer PetroChina Co. are seeking private investors for some units. Sinopec, officially known as China Petroleum & Chemical Corp., will sell as much as 30% of its oil retail business, in a sale Barclays Plc (BARC) estimates could raise more than USD20 billion. PetroChina and its parent China National Petroleum Corp., are considering opening up areas including pipelines, oil and gas exploration and refining to private capital.

"In 2014, the company expects to make significant advances in its development by fully embracing reform, leading to corporate transformation, organizational vigor and stronger corporate values," Sinopec Chairman Fu Chengyu said yesterday in a statement.

The Beijing-based company yesterday reported 2013 net income rose 3.4% to 66.1 billion yuan (USD10.6 billion), missing the 67.8 billion yuan mean of 12 analyst estimates compiled by Bloomberg.

"Sinopec is the most tied to the Chinese economy of the major oil companies and the economy might be grinding a bit slower this year," said Simon Powell, head of oil and gas research as CLSA Ltd. "All the talk of reform is great, restructuring the marketing business is great, but the bottom line is ultimately driven by the domestic economy."

China is pushing the most aggressive reforms in more than a decade as President Xi Jinping works to increase market forces in the economy. The nation set a 7.5% target for growth in 2014, matching last year’s goal, Premier Li Keqiang told the annual legislature meeting in Beijing this month. China’s economy actually grew 7.7% in 2013.

China Petrochemical Corp., the state-owned parent of Sinopec, has said it will build shale gas capacity at its Fuling site to 5 billion cubic meters a year by 2015, suggesting a national target of 6.5 billion cubic meters will be met or surpassed.

PetroChina, the country’s largest oil producer, is also cutting expenditure. It said last week its spending target for 2014 was 7.1% lower than the previous year. The company reported net income rose 12% to 129.6 billion yuan last year, beating the 125.7 billion yuan mean of 13 analyst estimates compiled by Bloomberg.

As MRC wrote before, last June, Sinopec officially commenced operations at its new lubricant facility in Singapore. The lubricant plant, with an initial production capacity of 100,000 tpy, is the company's first direct overseas investment. The company, a unit of China Petrochemical Corp., said it plans to expand its operations in Asia-Pacific, with the Singapore plant as its regional hub.

China Petroleum & Chemical Corporation, or Sinopec Limited is a Chinese oil and gas company based in Beijing, China. It is listed in Hong Kong and also trades in Shanghai and New York . Sinopec is the worlds fifth biggest company by revenue.
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Shell to open Shanghai technical centre

MOSCOW (MRC) -- Shell is setting up a lubricants technical centre in Shanghai to work closer with customers in the region, reported F+L.

Selda Gunsel, vice president of global commercial technology within Shell’s Projects & Technology organization, said that the centre would be up and running in the first quarter of 2014. It will be Shell’s first such centre in Asia.

The new research centre will focus mainly on next-generation automotive and industrial lubricants and greases.

Shell currently has three innovation hubs located in Houston, Amsterdam and Bangalore.

"Based on our previous experience, building partnerships with original-equipment manufacturers (OEMs) is difficult, because they are far away. That’s why we want to be close to our customers, particularly the OEMs, to co-engineer our products," she said.

Shell has spent between USD1.3 and 1.5 billion annually on research and development.

As MRC informed previously, Royal Dutch Shell will cut spending in its American exploration and production business by a fifth and could sell more of its shale assets, in another sign that oil majors are struggling to make profits in the booming sector.

Royal Dutch Shell plc is an Anglo-Dutch multinational oil and gas company headquartered in The Hague, Netherlands and with its registered office in London, United Kingdom. It is the biggest company in the world in terms of revenue and one of the six oil and gas "supermajors". Shell is vertically integrated and is active in every area of the oil and gas industry, including exploration and production, refining, distribution and marketing, petrochemicals, power generation and trading.
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INEOS announces legal action against Sinopec and Sinopec subsidiaries

MOSCOW (MRC) -- INEOS, the fourth largest chemical company in the world, has today announced that it is taking legal action against a number of Sinopec and Sinopec subsidiaries (SNEC, Anqing and others) for breach of contract and/or misuse of trade secrets, said the producer in its press release.

INEOS says that Sinopec Ningbo Engineering Company has broken a long established technology agreement which, together with trade secret misuse by other Sinopec companies, has enabled development of a series of new world scale Acrylonitrile plants without INEOS agreement or consent.

INEOS, which has otherwise excellent relationships with Sinopec and with China, has no choice other than to protect its intellectual property.

INEOS fears that these breaches of rights will cause major harm to its Acrylonitrile business which generates up to USD500m per annum of profit and has a replacement value of USD3 billion. It supports around 5,000 direct and indirect jobs in the USA and Europe.

INEOS is pursuing parallel actions in the Beijing High Court and through arbitration in Sweden. INEOS has every confidence that China has now developed an excellent system to protect intellectual property consistent with the fact that China now files more patents than any other country.

As MRC informed before, INEOS and Sinopec YPC have signed the Joint Venture Agreement and Articles of Association forming a 50%/50% Joint Venture Company to be based in Nanjing China. The Joint Venture, which is to be called INEOS YPC Phenol (Nanjing) Company Ltd is set to build the largest phenol acetone plant in China, due to complete at the end of 2016. It will have a total investment of approximately USD0.5bn and is expected to be operational by the end of 2016.

INEOS Group Limited is a privately owned multinational chemicals company consisting of 15 standalone business units, headquartered in Rolle, Switzerland and with its registered office in Lyndhurst, United Kingdom. It is the fourth largest chemicals company in the world measured by revenues (after BASF, Dow Chemical and LyondellBasell) and the largest privately owned company in the United Kingdom.
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Sinopec to сut сapital spending 4.2%

MOSCOW (MRC) -- China Petroleum & Chemical Corp. (Sinopec) said that it would reduce capital expenditures 4.2%, said The Wall Street Journal.

PetroChina Co. said that it would cut capital spending 7%. The two state-controlled oil companies have spent tens of billions of dollars to buy overseas oil and gas assets in the past decade. Sinopec, as China Petroleum is known, PetroChina and their parent companies have spent USD26 billion on acquisitions in the past year alone, data provider Dealogic said. That has put their combined free cash flow, or operating cash flow minus capital expenditures, into negative territory.

Sinopec's net profit for last year rose 3.4% to 66.1 billion yuan (USD10.6 billion) from 63.9 billion yuan a year earlier. Analysts polled by Thomson Reuters had forecast 69 billion yuan for last year.

Returns for China's major oil companies have declined for the past seven years as the companies have expanded investment. To improve results, Sinopec and PetroChina are restructuring their refining and marketing businesses by taking on investors. Sinopec said last month that it would allow outsiders to own as much as 30% of its marketing-and-distribution business, which includes more than 30,000 gasoline stations.

Other international energy companies, such as Exxon Mobil Corp. and BP, have been scaling back spending and selling noncore assets, partly in response to a 15% slump in crude prices over the past two years.

The core of Sinopec's operations is in oil refining and sales, but those segments aren't as attractive as other parts of the oil-and-gas business. Sinopec recorded an operating profit of 8.6 billion yuan from its refining business last year—recovering from an operating loss of 11.4 billion yuan a year earlier—in part because the government raised gasoline and diesel prices in September.

China's government often puts pressure on its refiners not to raise fuel prices when global crude-oil costs surge, helping to keep a lid on inflation. PetroChina and Sinopec control more than 80% of China's refining capacity.

Analysts said Sinopec and PetroChina might shift spending in favor of businesses with higher returns, such as exploration and production. PetroChina on Thursday reported a 12% increase in 2013 net profit to 129.6 billion yuan. Offshore oil-and-gas producer Cnooc Ltd. is scheduled to release its results on Friday.

Sinopec Corp. is one of the largest scale integrated energy and chemical company with upstream, midstream and downstream operations. Its principal business includes: exploring, developing, producing and trading crude oil and natural gas; producing, storing, transporting and distributing and marketing petroleum products, petrochemical products, synthetic fiber, fertilizer and other chemical products. Its refining capacity and ethylene capacity rank No.2 and No.4 globally.
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BASF presents innovative industrial coatings

MOSCOW (MRC) – BASF’s Coatings division is presenting an array of new developments and refinements at the PaintExpo, in response to the ever higher requirements for surface coatings, said the producer in its press release.

The Coatings division of BASF will be presenting its wide range of products and applications at the trade fair. With its RELEST brand exhibits, BASF will be presenting powder and liquid coatings. These provide, i.a. in the plant construction and agricultural machinery industries, high corrosion protection and reliable resistance against weather and environmental impacts.

Thanks to low material costs, high corrosion protection and good applicability, BASF’s CathoGuard e-coat stands out in industrial coating (e.g., radiators).

Salcomix paint systems provide precise colors for refinish applications. Around 20,000 color formulas are available, which allows customer requirements to be processed quickly and flexibly.

At the PaintExpo, BASF will be exhibiting its wide product portfolio for individual customer requirements along all processes in coating technology. From corrosion protection to scratch resistance, as well as color diversity, visitors will find something for every application in the industrial sector.

BASF’s Coatings division develops, produces and markets innovative automotive coatings, automotive refinishes and industrial coatings as well as decorative paints. We operate sites in Europe, North America and South America as well as Asia Pacific. Within this network, we collaborate closely with our customers all over the world. In 2013, the Coatings division achieved global sales of EUR2.9 billion.

BASF is the world’s leading chemical company: The Chemical Company. Its portfolio ranges from chemicals, plastics, performance products and crop protection products to oil and gas. We combine economic success with environmental protection and social responsibility. Through science and innovation, we enable our customers in nearly every industry to meet the current and future needs of society. Our products and solutions contribute to conserving resources, ensuring nutrition and improving quality of life. We have summed up this contribution in our corporate purpose: We create chemistry for a sustainable future. BASF had sales of about EUR74 billion in 2013 and over 112,000 employees as of the end of the year.
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