25 May 2009 07:07 [Source: ICIS news]
By Dolly Wu and Judith Wang
SHANGHAI (ICIS news)--Petrochemical giant PetroChina has just jumpstarted its overseas acquisition binge in the region by proposing to take up a sizeable chunk of oil refiner Singapore Petroleum Corp (SPC), timing its strategy while the market is still weak, analysts said on Monday.
The Chinese state-owned oil and gas giant is prepared to spend a total of yuan (CNY)233bn ($34.2bn) this year to buy and upgrade assets according to its chairman Jiang Jiemin.
“PetroChina will likely continue to acquire overseas assets,” said Qiu Xiaofeng, a petrochemical analyst from Shanghai-based China Merchants Securities.
The company, along with its rival Sinopec, is expected to scour the markets for potential acquisition targets, analysts said.
PetroChina had announced on Sunday it would buy 45.51% of ?xml:namespace>
“It is a good chance for us to purchase such potential industry company now at a favorable price. We believe that is a powerful measure to help us to develop markets in
SPC would be PetroChina’s first major acquisition of a publicly-listed company in Asia.
PetroChina is engaged in trading of physical crude oil, refined oil products such as gasoline, gasoil, jet fuel, naphtha and fuel oil and petrochemicals, and has investments in a storage facility. The company’s main markets include
SPC is listed in the Singapore Exchange with interests in petroleum refining and oil and gas exploration and production, and holds a 50% stake in Singapore Refining Company Pte Ltd, which owns a 285,000 bbls/day refinery. It has assets in
The two companies have a good fit, analysts said.
“SPC gives PetroChina immediate access to further its oil/gas exploration footprint in
"Although SPC’s exposure to upstream is currently small, but because E&P is PetroChina’s core competence, the latter could potentially turn these projects into big wins via increased investments and advanced technologies,” he added.
PetroChina’s proposed acquisition of SPC still requires approvals from relevant authorities.
“Given the friendly relations between
But pursuing acquisitions at this point when petrochemical companies had just gone through two difficult quarters may not be so easy, said Qiu of China Merchants Securities.
Some companies could just be on the verge of turning around from losses suffered since the fourth quarter, aided by the gains in crude oil prices and may resist being taken over, he said.
"Target companies that are willing to sell is not easy to find," said Qiu added.
($1 = S$1.44 / $1 = CNY6.82)
Serene Cheong of ICIS Heren contributed to this article
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