28 November 2012 11:18 [Source: ICIS news]
SINGAPORE (ICIS)--SHV Gas (China) Co plans to sell liquefied petroleum gas (LPG) assets which involve its subsidiary Zhenrong Gas Chain Operation Co in Guangzhou, traders in south China said on Wednesday.
Traders said SHV is in talks with potential buyer Sinopec Refining Sales Co, traders said. This was confirmed by a source at Sinopec.
SHV is offering 11 Guangzhou-based LPG stations and 10 stations that supply vehicle LPG, a trader said.
“Guangzhou Zhenrong suffers losses from LPG retail,” the trader said, “the company’s operation costs for the retail of residential LPG may be high at [yuan] CNY600-700/tonne [$96-112/tonne], versus usual costs of CNY250-320/tonne. Zhenrong has invested a lot in human resources, facilities and brand establishment, but it has not been able to boost sales much.”
However, the company’s stations for vehicle LPG is attractive, said the trader.
Talks between SHV and Sinopec suggest foreign companies are not well fitted in the Chinese LPG market and that Sinopec intends to play a more important role in the LPG retail market.
SHV Gas (China) has six subsidiaries in China, which are located in Guangzhou, Shenzhen, Zhuhai, Dongguan and Foshan cities in Guangdong province and Shanghai city. The company acquired 90% of the stocks in Guangzhou Zhenrong Gas in December 2005.
($1 = CNY6.23)
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