China’s Sinochem Group (中國中化集團) is exploring the sale of its 40 percent stake in Brazil’s Peregrino offshore oil field, four people familiar with the matter told reporters, a deal that could see the state-owned conglomerate walk away from what was once touted as a key overseas asset because of historically low oil prices.
The oil and chemicals firm agreed to buy the stake from Norway’s Statoil ASA for US$3.07 billion in 2010 — beating out a raft of Chinese rivals chasing high-quality assets. The Norwegian giant owns the other 60 percent of Peregrino, the largest heavy oil field it operates outside its home patch.
However, two of the people with knowledge of the matter said Sinochem is moving to sell its largest overseas upstream stake — with capacity to pump 100,000 barrels per day — as it reshapes its assets to reflect oil prices having halved in the past two-and-a-half years.
With that in mind, Sinochem was pitching the sale at a big discount compared with its purchase price, one person said.
Earlier this month, Reuters reported Sinochem was in early talks to buy a stake in Singapore-listed commodity trader Noble Group Ltd, a move that would further its ambitions to become more active in global energy trade and also develop China’s gas industry.
The process to sell the Brazilian stake is still at an early stage and a final decision would depend on how the negotiations progress, said the people familiar with the matter, who spoke on condition of anonymity, because they were not authorized to discuss it publicly.
Statoil declined to comment and Sinochem did not respond to requests for comment from reporters.
Two sources said Sinochem’s intent to sell the stake has been shared with India’s Oil and Natural Gas Corp, which did not respond to requests for comments.
One person said the stake is also likely to be pitched to other international buyers, including some Japanese firms and Kuwait Foreign Petroleum Exploration Co, which last month snapped up Royal Dutch Shell PLC’s stake in Thailand’s Bongkot gas field for US$900 million.
The potential sale of the stake in Peregrino — 85km off Brazil in the Campos basin below about 100m of water — comes as oil prices hover in the mid-US$50s per barrel range, well below the highs of recent years. That trend has also prompted other industry players to consider selling once-prized assets.
Earlier this week, Reuters reported Malaysian state-owned oil and gas firm Petrolium Nasional Bhd is aiming to sell a large minority stake in a local gas project for up to US$1 billion as it seeks to raise cash and cut development costs.
For its part, Sinochem has seen growth in its key oil trading business stagnate, with increasing domestic competition from the likes of state oil traders China International United Petroleum & Chemical Corp (中國國際石化聯合) and China National United Oil Corp (中國聯合石油), while overseas oil and gas assets have struggled amid the prolonged low oil prices.
“Sinochem is readjusting its energy asset structure,” a Beijing-based industry veteran familiar with the company’s strategy said. “As a medium to small-sized oil producer, exposure to higher cost assets like deep water has become over-challenging.”
“The company sees itself more as an asset manager. This becomes a clearer direction under the new management,” the executive said, referring to Sinochem chairman Ning Gaoning (寧高寧), who took over the firm last year.
The potential sale of the Peregrino stake also comes ahead of the second phase of the project’s development, expected to cost about US$3.5 billion, with production from the new phase set to start by the end of the decade.
The second phase is designed to add about 250 million barrels in recoverable reserves to Peregrino, which currently contains an estimated reserve of between 300 million and 600 million barrels of recoverable oil.
NOT JUSTIFIED: The bank’s governor said there would only be a rate cut if inflation falls below 1.5% and economic conditions deteriorate, which have not been detected The central bank yesterday kept its key interest rates unchanged for a fifth consecutive quarter, aligning with market expectations, while slightly lowering its inflation outlook amid signs of cooling price pressures. The move came after the US Federal Reserve held rates steady overnight, despite pressure from US President Donald Trump to cut borrowing costs. Central bank board members unanimously voted to maintain the discount rate at 2 percent, the secured loan rate at 2.375 percent and the overnight lending rate at 4.25 percent. “We consider the policy decision appropriate, although it suggests tightening leaning after factoring in slackening inflation and stable GDP growth,”
DIVIDED VIEWS: Although the Fed agreed on holding rates steady, some officials see no rate cuts for this year, while 10 policymakers foresee two or more cuts There are a lot of unknowns about the outlook for the economy and interest rates, but US Federal Reserve Chair Jerome Powell signaled at least one thing seems certain: Higher prices are coming. Fed policymakers voted unanimously to hold interest rates steady at a range of 4.25 percent to 4.50 percent for a fourth straight meeting on Wednesday, as they await clarity on whether tariffs would leave a one-time or more lasting mark on inflation. Powell said it is still unclear how much of the bill would fall on the shoulders of consumers, but he expects to learn more about tariffs
Greek tourism student Katerina quit within a month of starting work at a five-star hotel in Halkidiki, one of the country’s top destinations, because she said conditions were so dire. Beyond the bad pay, the 22-year-old said that her working and living conditions were “miserable and unacceptable.” Millions holiday in Greece every year, but its vital tourism industry is finding it harder and harder to recruit Greeks to look after them. “I was asked to work in any department of the hotel where there was a need, from service to cleaning,” said Katerina, a tourism and marketing student, who would
i Gasoline and diesel prices at fuel stations are this week to rise NT$0.1 per liter, as tensions in the Middle East pushed crude oil prices higher last week, CPC Corp, Taiwan (台灣中油) and Formosa Petrochemical Corp (台塑石化) said yesterday. International crude oil prices last week rose for the third consecutive week due to an escalating conflict between Israel and Iran, as the market is concerned that the situation in the Middle East might affect crude oil supply, CPC and Formosa said in separate statements. Front-month Brent crude oil futures — the international oil benchmark — rose 3.75 percent to settle at US$77.01
RSS