China’s state-owned oil refining giants are in discussions to form a purchasing group to buy crude together, increasing their bargaining power and avoiding bidding wars.
Senior executives from China Petroleum & Chemical Corp (中國石油化工), PetroChina Co (中國石油天然氣), Cnooc Ltd (中國海洋石油) and Sinochem Group Co (中國中化集團) are in advanced talks to iron out details of the plan, said people familiar with the initiative, who asked not to be identified as discussions are private and ongoing.
The proposal has won the support of the Chinese central government and relevant industry watchdogs, the people said.
For a start, the group is set to collectively issue bids for certain Russian and African grades in the spot market, they said.
While it is unclear how the cooperation would evolve, the group represents refiners that import more than 5 million barrels of oil a day. That is nearly one-fifth of OPEC’s total output, which would make it the world’s largest crude buyer in theory.
The initiative — first mooted last year — gained traction this year as the COVID-19 outbreak spurred historic output cuts by OPEC and its allies to regain control of the market.
The original epicenter of the pandemic, China was the first major economy to reopen and its consumption of transportation and industrial fuels is now almost back to pre-virus levels. The V-shaped recovery has in the past few months prompted the country’s state-owned and independent refiners to snap up Russian and Brazilian crude in the spot market, pushing up prices.
The state-owned refiners may jointly bid for Russian Eastern Siberia–Pacific Ocean cargoes as early as next month in a trial run, the people said.
The group might expand to allow participation from non-state owned processors — including so-called teapots in Shandong Province, they said.
Importers from China to the US and Europe with long-term supply contracts with Saudi Arabia and other big producers have struggled this year to manage the amount of crude received each month amid fluctuating domestic demand, refining margins and swelling stockpiles.
Based on terms embedded in these contracts, buyers can inform sellers of their preferred volumes, loading dates and grades in a process known as nomination. Volumes can only be adjusted slightly from earlier-agreed liftings, and final decisions lie with the seller.
Saudi Aramco, Iraq’s State Organization for Marketing of Oil and the Abu Dhabi National Oil Company all sell their crude at official prices announced early each month.
Indian processors and ports went so far as to declare force majeure in attempts to back out of crude liftings after the world’s biggest lockdown slashed demand.
More recently, buyers across China and India sought more crude from Saudi Arabia after it cut volumes in line with a wider OPEC+ pledge.
By banding together, the Chinese group hopes to have a louder voice and bigger say in the volumes and prices for crude purchased, the people said.
While it is unclear if the Chinese oil-procurement group will live up to expectations, grievances have been building up for several years as the country plays an ever-expanding role in the Asian and international oil market.
Several mega-refineries have opened in the past few years, while Shandong teapots have become regular buyers of crude from everywhere from Brazil to Russia.
China International United Petroleum & Chemical Corp (中國國際石化聯合) — the trading arm of China Petroleum & Chemical — in particular has been a persistent critic of Saudi Arabia’s crude sales and prices, as well as Asia’s passive role as a price taker.
The company sought in 2018 to renegotiate its contractual volumes with Aramco, resulting in a spat.
Softbank Group Corp plans to keep a stake in the chip designer Arm Ltd, even if it sells a partial interest to Nvidia Corp, the Nikkei reported. The companies are negotiating terms, the newspaper reported, citing sources. Softbank might take a stake in Nvidia after it buys Arm, the report said. Nvidia and Arm might also merge through a share swap, and Softbank would become a major shareholder in the combined company, it said. The two parties aim to reach a deal in the next few weeks, the sources said, asking not to be identified because the information is private. Nvidia is the
END TO SPECULATION: The hotel’s management contract has been extended, despite reports that it wanted to end its alliance with Hyatt Hotels over a deal with Riant Capital Singapore-based Hong Leong Hotel Development Ltd (豐隆大飯店股份) yesterday said it has extended a management contract to ensure the continued presence of the Grand Hyatt brand in Taipei, ending rumors that the two sides were parting ways. “We are pleased Hyatt is able to come to terms on the extension of the management contract of Grand Hyatt Taipei,” said Kwek Leng Beng (郭令明), executive chairman of City Developments Ltd (城市發展) and Millennium & Copthorne Hotels Ltd (千禧國敦酒店). Hong Leong Hotel Development is a subsidiary of Millennium, and both fall under the Hong Leong Group (豐隆集團). The Grand Hyatt Taipei (台北君悅大飯店), owned and built by
MOVING FROM CHINA? The article did not name the company, but Foxconn, Wistron and Pegatron were among firms chosen for a production-linked incentive plan in India An Apple Inc vendor is looking at shifting six production lines to India from China, which could result in US$5 billion of iPhone exports from the South Asian nation, the Times of India reported, citing people familiar with the matter who it did not identify. The establishment of the facility would create about 55,000 jobs over about a year, the newspaper reported, not naming the Apple vendor. It would also cater to the domestic market and expand operations to include tablets and laptops, the newspaper reported. Samsung Electronics Co and Apple’s assembly partners are among 22 companies that have pledged 110 billion
’WHITE BOX’: The open platform would give local firms access to Cisco’s cloud-based mobile network to develop 5G telecom equipment and tap into the global market The Ministry of Economic Affairs (MOEA) yesterday introduced a new 5G “open lab” in collaboration with US-based information technology and networking giant Cisco Systems Inc to address the rapidly growing “white box” 5G networking equipment market. The open lab will be a platform where Taiwanese manufacturers can access Cisco’s cloud-based mobile network to develop their own 5G telecom equipment, such as small-cell base stations, network switches, modems and Internet of things (IoT) devices, a ministry statement said. The open platform would allow Taiwanese manufacturers to tap into the lucrative 5G telecom equipment market, which was previously monopolized by Nokia Oyj, Ericsson AB
RSS