Sinopec (China Petroleum & Chemical Corp.), which is currently known as the largest refiner in Asia, officially announced that its first shale-gas field will be put into commercial operation sooner than expected. The company expects its output to reach 10 billion cubic meters a year by 2017.
It also became clear that Sinopec plans to sell about 30% of its oil retail business. The sale is estimated by Barclays Plc to be able to raise more than 20 billion dollars. Fu Chengyu, who is the Chairman of the company said in the statement, which was cited by Bloomberg: “In 2014, the company expects to make significant advances in its development by fully embracing reform, leading to corporate transformation, organizational vigor and stronger corporate values. We will continue to promote transformation and upgrades with a focus on improving development quality and efficiency.”
As reported by the Wall Street Journal, the Chairman also said that Sinopec made “a number of major breakthroughs” in different areas, ranging from technology and research to equipment manufacturing. According to him, this will be beneficial for the company and will provide it with an “earlier-than-expected entry” into commercial shale-gas production.
Chairman Chengyu also said, cited by the Financial Times: “The new capital from outside investors will be used for adjusting capital structure, further exploiting shale gasfields, investing in environment and safety, and upgrading quality of oil products.”
Yesterday Sinopec reported that its net income for 2013 increased by 3.4% and reached 66.1 billion yuan (10.6 billion dollars). However, a decrease in international crude oil and chemicals influenced on the fourth-quarter earnings of the company, causing them sharply decline.
The head of oil and gas research unit at CLSA Ltd – Mr. Simon Powel commented for Bloomberg: “Sinopec is the most tied to the Chinese economy of the major oil companies and the economy might be grinding a bit slower this year. All the talk of reform is great, restructuring the marketing business is great, but the bottom line is ultimately driven by the domestic economy.”
Sinopec (China Petroleum & Chemical Corp.) fell by 0.38% in Shanghai to close the session at 5.22 yuan, marking a one-year change of -12.10%. The oil company is valued at 612.79 billion yuan. According to the Financial Times, the 7 analysts offering 12-month price targets for China Petroleum & Chemical Corp. have a median target of CNY 6.36, with a high estimate of CNY 6.82 and a low estimate of CNY 5.40. The median estimate represents a 21.37% increase from the previous close of 5.24 yuan.
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