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Sinopec Courting Exxon Mobil
Chinese oil major Sinopec is poised to hand Exxon Mobil Corp a slice of its lucrative retail market in an effort to raise investor confidence in its planned IPO, China-based senior oil executives said on June 7.
They said the country's second largest oil company, which is seeking the Royal Dutch Shell Group as a strategic partner, was still in talks with other international companies in a bid to broaden its investment appeal before the global public offering.
"We won't be confining ourselves to only one partner," a senior China Petrochemical Corp (Sinopec) official said.
Sources said the planned US$1 billion initial public offering could take place as early as September.
China's oil IPO debutant, Petrochina, had after a dismal debut in April chalked up impressive gains and renewed the confidence of other IPO aspirants.
Sinopec started courting oil majors in earnest after BP Amoco bought a 20 per cent stake in PetroChina during its US$3.1 billion IPO.
The sources said Sinopec was able to attract the attention of top oil companies by promising them a stake in its highly profitable retail sector business, and in return receive much needed capital and expertise.
The oil majors are in talks with Sinopec to either jointly build or buy retail stations in South and East China owned by Sinopec to operate the country's largest network of petrol stations.
"Partnership with multinationals are essential to our stock offer...and we cherish those who have cooperated with us in the past years," the official said.
China-based foreign oil executives said, unlike Shell, Exxon Mobil was not expected to take up equity stakes in the Sinopec IPO but instead use its role in a planned US$3 billion investment in Fujian as leverage.
"It seems not part of the corporate culture for Exxon to be an equity investor. It would most likely make the best out of its Fujian project," said an official with an oil major.
Sinopec, Exxon Mobil and Saudi Aramco aim to build a 164,000 barrel-per-day refinery and a 600,000 tons-per-year ethylene plant in the Fujian Province.
Exxon Mobil and Saudi Aramco would each have a 25 per cent stake, with Sinopec holding 50 per cent.
The Sinopec official said a joint venture retail deal may not have to wait until the Fujian project takes off.
"It may come before the project takes off, so long as both parties believe it is to our mutual benefit," the Beijing-based official said, but declined to comment on when and the scale of the joint venture retail network.
The new refinery and ethylene plant, pending state approval, would only come on stream in 2003 or 2004, industry sources said.
Exxon Mobil operates 33 petrol stations in China, the bulk of which are joint ventures with a Sinopec Guangdong marketing arm.
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