Sinopec Enters Hong Kong Retail Market; Signs
Gabon Deal
China Petroleum and Chemical (Sinopec), one of China's
leading petroleum petroleum refining and distribution
companies, has signed a lease on five retail gas stations
in Hong Kong.
Under the terms of the lease from Hong Kong's Land Department,
the company would take over the lease from two gas stations
owned by Shell and Caltex, and would develop three other
lots which have not yet been developed. The length of
the leases are 21 years, and the company would pay HK$309
million for the lease.
Sinopec is traded on Hong Kong's H share market, and
this is seen as a move to raise the company's visibility
to raise its visibility among its international investors,
many of which have a Hong Kong presence. This seems to
be the only business rationale for the deal, which otherwise
has no business significance.
Like many of other China's leading state-owned firms,
Sinopec is seeking to build a global presence and brand.
Part of the rationale is to attract overseas investors,
and part is to demonstrate that China can build leading
global companies which can stand as equals with other
leading multinationals.
More significant from the business point of view is Sinopec's
deal to buy oil from Total Gabon through a Sinopec subsidiary.
Exact details of the deal were not disclosed.
While Gabon in west Africa, lags behind Nigeria and Angola
as an oil producer, Chinese president Hu Jintao has made
Gabon one of the official stops on his current tour, which
has already taken him to France and Egypt. It's worth
noting that Total Gabon is a subsidiary of Total, the
French oil refining and distributing giant.
It would be naive to think that his stop in Gabon has
nothing to do with securing a reliable source of oil for
China.
China's energy consumption has skyrocketed during the
past year, and the country is currently suffering from
severe energy shortages in all 31 provinces, which often
include blackouts. The past year have also seen huge rises
in sales of automobiles, which have led to increased consumer
demand for gas.
China's current domestic oil production is falling, and
the country's petroleum giants have focused on exploring
and securing oil sources outside the country, mainly in
central Asia and Africa.
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