Sinochem mulls listing oil assets in Hong Kong

IPO of US$14.6bil business could happen as soon as early 2018

BEIJING: China’s Sinochem Group is considering listing its oil-related business in Hong Kong, according to people with knowledge of the plan.

The state-owned chemicals conglomerate is making initial evaluations of its oil assets, which have a combined value of around 100 billion yuan (US$14.6bil), said the people, who asked not to be identified as the information is confidential.

It hasn’t made a final decision about the assets that would be included in a listing, which may happen as soon as early 2018, and details such as valuation may change, another person said.

The move would be in line with President Xi Jinping’s drive to reform the nation’s bloated state-owned enterprises by introducing outside capital and mixed ownership. Nobody answered two calls, a fax and and email to Sinochem seeking comment.

Bloomberg reported in March that Sinochem hired investment banks to arrange a stake sale to outside investors ahead of a potential initial public offering.

Sinochem could still eventually seek listing of entire group, two of the people said. Separately, the company is seeking a merger with China National Chemical Corp, known as ChemChina, Bloomberg reported in October.

Sinochem’s oil assets stretch from upstream production and oil refining to tankers, storage facilities and fuel stations, according to its website.

The company has recoverable reserves of roughly 800 million barrels of oil equivalent in nine countries, as well as refineries with annual processing capacity of around 25 million tonnes, and it trades about 100 million tons of crude and products annually, the site says.

Sinochem could be looking to shed oil assets to focus the parent company on its core chemicals business, said Tian Miao, a Beijing-based analyst at North Square Blue Oak Ltd.

The Beijing-based company has three Hong Kong-listed units focusing on fertiliser, real estate and finance, as well as one Shanghailisted company, Sinochem International Corp, investing in areas from energy to rubber as well as metallurgy. The group held total assets of more than 350 billion yuan at the end of 2015, according to its website.