Fri, Nov 23, 2001 page18

• CPC plans share sale in second half of 2002

  FOR SALE Chinese Petroleum said it hopes to sell more than 50 percent of its stock in one go if the market can absorb it, otherwise the shares will be sold in stages

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  Chinese Petroleum Corp (CPC,中油) said it aims to sell more than 50 percent of its shares to overseas and local investors in the second half of next year as part of a government asset sale plan.

  The Legislative Yuan is likely next month to lay down rules for the sale, said Liao Tsang-long (廖昌龍), a spokesman for state-owned company. That will be followed by about seven months of preparation, president Pan Wenent (潘文炎) said.

  Chinese Petroleum has assets of NT$470 billion (US$13.6 billion) and shareholders' capital of NT$130 billion.

  "How much we raise depends on how much the market can absorb," Pan said. No financial advisers have been appointed yet, he said.

  Chinese Petroleum is facing falling profit after Formosa Plastics Corp (台塑) started a rival refinery last year. That ended Chinese Petroleum's monopoly on oil refining and distribution of fuels such as gasoline, and forced the company into growing exports to dispose of surplus fuel.

  Chinese Petroleum exports about 130,000 tonnes of diesel a month to countries such as Singapore, Malaysia, Thailand, Indonesia and the Philippines.

  Taiwan had planned to sell shares in the company since 1999, Liao said. That was delayed while the government formulated rules relating to the liberalization of the oil industry that would allow the share sale to proceed.

  Chinese Petroleum's profit may fall this year as Formosa gains market share, preventing oil product prices from being increased, Liao said in an interview.

  The company's net income fell 39 percent to NT$8.34 billion last year, as fuel demand dropped in the aftermath of the 921 earthquake that caused at least NT$82 billion in losses for manufacturers. Profit was also crimped as the average cost of crude oil rose more than 50 percent from 1999 levels.

  Chinese Petroleum's revenue rose 24 percent to NT$479.7 billion last year.

  The company hopes to sell more than 50 percent of its stock in one go if the market can absorb it, otherwise the shares will be sold in stages, Pan said.

  "Much of how the market receives CPC's share sale is contingent upon whether oil prices recover from current levels," said Rachel Tsang, senior analyst at DBS Vickers Hong Kong Ltd.

  Crude oil on the New York Mercantile Exchange has fallen 46 percent in 12 months.

  Crude oil for January delivery Wednesday fell US$0.19, or 1

  percent, to US$18.96 a barrel.

  Separately, Chinese Petroleum expects Taiwan's government to approve next month its plan to jointly look for oil between Taiwan and China with China National Offshore Oil Co (CNOOC, 中國海洋石油), China's dominant offshore oil company, Pan said.

  Joint exploration of the Tainan Basin of the Taiwan Strait would signal closer cooperation between oil companies in Taiwan and China.

  Taiwan last year used 815,000 barrels a day of oil, according to BP Plc's Annual Statistical Review of World Energy.

  As it produces just 1,000 barrels a day, Taiwan relies on imports from the Middle East and West Africa for most of its crude oil needs.

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