Dec. 4, 2014, 6:32 AM
- The Shanghai Composite gained 4.3% overnight, bringing its advance over the past month to 19%, the most among 93 global markets. The index is now higher by 37% year-to-date.
- The rally comes not just alongside a PBOC rate cut, but as mainland stocks opened up to global investment in early November - exchange volume nearly doubled the previous 30-day average.
- Among the movers: PetroChina (NYSE:PTR) and Sinopec (NYSE:SNP) both soared by the 10% daily limit.
- FXI +3.9% premarket
- ETFs: FXI, EWH, PGJ, YINN, GXC, FXP, ASHR, YANG, MCHI, PEK, XPP, YAO, YXI, CHXF, FCA, CN, CHIE, EWHS, FCHI, ASHS, CNXT, CHNA, KBA, FHK
Nov. 17, 2014, 2:58 PM
- Sinopec (SNP -2.5%) pledges to spend $4.6B over three years to address safety concerns related to its oil pipelines, after authorities order it to temporarily shut down two of its pipelines following surprise inspections.
- SNP is told to shut the 179-km Linyi-Cangzhou pipeline and a 40-km pipeline from the Tanggu oil depot to Dagang in Tianjin by Nov. 20 after inspections found numerous problems including "stress corrosion and fatigue damage."
Oct. 31, 2014, 7:45 AM
- Sinopec (NYSE:SNP) agrees to acquire a stake in a Saudi Arabian petrochemical company for $562M to enhance its global network and international operation of the refining segment.
- SNP will own a 37.5% interest in Yanbu Co., while its partner Saudi Aramco will hold the remaining of 62.5%.
- The deal came after SNP posted a 12% Y/Y decline in Q3 net profit on weaker oil demand; growth prospects look poor with no obvious catalysts ahead and a reduced capital spending budget, Bernstein's Neil Beveridge says.
Oct. 20, 2014, 2:18 PM
- PetroChina (PTR +0.4%) says it is on course to surpass a 2.6B cubic meter target for shale gas production in 2015 from fields in Sichuan province, adding that the estimate is conservative and newer technology may push the number much higher.
- Geographical structures in PTR’s fields in southern Sichuan are more difficult to drill through than the Fuling project, where Sinopec (NYSE:SNP) operates China’s largest shale-producing project, and gas reservoirs have been smaller
- PTR has nine shale gas exploration rights in Sichuan and Chongqing provinces; four have started or are close to commercial production.
Oct. 9, 2014, 11:18 AM
- Ecuador, OPEC’s smallest-producing member, has signed contracts with companies including Halliburton (NYSE:HAL), Schlumberger (NYSE:SLB), Sinopec (NYSE:SNP) and YPF for a combined $2.12B investment.
- A joint venture between SLB and Tecpetrol will invest at least $702M in the block 12 oil concession, state-run Petroamazonas says; HAL will invest $579M in three concession blocks, and won a contract to boost output at fields in the block 58 concession with a minimum $240M investment.
- The deals come as the government seeks to boost crude output to offset a 15% drop in the price of its Oriente crude in the last three months.
Oct. 6, 2014, 2:19 PM
- Malaysia’s Petronas makes its most specific threat yet to delay development of its proposed C$10B Pacific Northwest natural gas export terminal on Canada's Pacific coast, as CEO Shamsul Azhar Abbas says the Canadian and British Columbia governments must commit to lower taxes by the end of this month to meet its mid-December target for a final decision.
- The CEO says “current project economics appear marginal” based on the company's latest internal assessment, and that if Petronas is unable to move forward with the project this year it probably would not reconsider the Canadian Pacific coast “until the next LNG marketing window, anticipated in 10-15 years.”
- In April, Petronas sold a 15% stake in the project to Sinopec (NYSE:SNP); earlier, Japan Petroleum Exploration and Indian Oil Corp. each took 10% stakes.
- Backers of competing LNG-terminal plans in B.C. include Exxon Mobil (NYSE:XOM), Royal Dutch Shell (RDS.A, RDS.B) and China’s Cnooc (NYSE:CEO).
Sep. 30, 2014, 4:54 PM
- Saudi Aramco and partner Sinopec (NYSE:SNP) plan to start a main refinery unit for making gasoline from crude oil at a joint venture plant on the Red Sea next year, Bloomberg reports.
- The joint venture refinery reportedly will produce low-sulfur diesel for export and have the fuel available for sale next year; the lower the sulfur content in diesel, the cleaner it is as a transport fuel, and the JV’s diesel would meet European specifications.
- The plant will have crude processing capacity of 400K bbl/day; Saudi Aramco and partner Total (NYSE:TOT) built a refinery of the same size on the Persian Gulf, which has been running at full capacity since Aug. 1.
Sep. 17, 2014, 11:46 AM
- Sinopec (SNP -0.4%) and PetroChina (PTR +2%), China's largest oil and gas producers, plan to increase shale gas output by 40%/year to meet the country’s production target.
- SNP plans to invest 21.5B yuan ($3.5B) in shale gas drilling and expects to produce as much as 3.5B cu. meters by 2015, while PTR is targeting output of more than 2.5B cu. meters in 2015 after investing 11.2B yuan, according to the Ministry of Land and Resources.
- China’s 2015 target depends on SNP's ability to produce shale gas at the Fuling project in the country’s southwest, but the company has halved its target of producing 60B cu. meters by the end of the decade because of geological challenges.
Sep. 15, 2014, 10:28 AM
- Investors are underwhelmed by Sinopec's (SNP -5.5%) plan to sell a $17.5B stake in its sprawling network of gas stations to 25 local investors, after expectations for the sale were for $20B-$30B.
- The stake sale didn't turn out to be as valuable because it isn't real reform, writes Heard on the Street's Abheek Bhattacharya; the fragmented set of investors consists mostly of local Chinese funds and businesses who have little know-how in retail petroleum operations.
- No individual stake will exceed 2.8% of the retail business, making it unlikely that any of the investors will have much clout to press for meaningful changes.
- SNP's story will now return to its business fundamentals instead of reform, says Macquarie's James Hubbard; on the plus side, SNP is selling lower-sulfur fuels to combat pollution, which earn it higher margins.
Sep. 15, 2014, 1:32 AM
- After announcing the sale of a $17.5B stake in its retail unit to investors, Sinopec (NYSE:SNP) now says it will use the cash toward optimizing its retail fuel business, boosting its non-fuel sales and paying down debts owed to its parent.
- The deal comes as the Chinese government pushes to restructure its state-owned enterprises by bringing in private capital.
- The stake will be sold to a group of 25 Chinese and foreign investors.
Aug. 29, 2014, 11:58 AM
- China energy heavyweights Sinopec (NYSE:SNP) PetroChina (NYSE:PTR) have raised their outlook on the country's shale gas industry but stopped short of predicting a near-term boom.
- Costs are coming down sharply, SNP Chairman Fu Chengyu said at the company's H1 results briefing earlier this week, citing the cost of shale gas drilling at the Fuling field - the country's largest shale gas project - which has been falling steadily to ~60M yuan ($9.8M) per well.
- PTR Vice Chairman and President Wang Dongjin said the company is keeping its drilling cost at 55M yuan per well and will strive to keep it under 50M.
- But Fu and Wang both ruled out the possibility of a shale gas boom in the near future, saying costs must come down much more and gas prices must rise further to justify a substantial step-up in investment.
Aug. 28, 2014, 5:08 AM
- In a grudging first step towards opening its state-dominated oil sector, China has granted a crude import license to non-state-owned Guanghui Energy.
- China's Ministry of Commerce stopped short of truly opening the market, since the new license does not actively pose a threat to China’s Sinopec (NYSE:SNP) and PetroChina (NYSE:PTR).
- Included in its WTO commitments, China allocates about 10% of its crude imports to non-state traders, but additional paperwork limits their competitiveness.
- ETFs: USO, OIL, UCO, SCO, BNO, DTO, DBO, CRUD, USL, UWTI, DWTI, DNO, SZO, CHIE, OLO, OLEM, TWTI
Aug. 27, 2014, 8:58 AM
- Sinopec's (NYSE:SNP) attempt to spin off 30% of its retail gas station business has drawn interest from China Life (NYSE:LFC), the country's biggest insurance company, and gas supplier ENN Energy; they are the first investors to publicly announce their intention to invest in the SNP unit.
- SNP is seeking to raise as much as 100B yuan ($16.3B) by selling part of its stake in the Sinopec Sales unit, which opoerates more than 30K fuel stations and 23K convenience stores in China.
Aug. 26, 2014, 11:38 AM
- Sinopec (SNP +0.4%) continues to move higher after yesterday's Q2 earnings beat and news of 37 bidders vying for a 30% stake in SNP's profitable retail business, but analysts are turning cautious on the stock.
- UBS removes SNP from its Key Call list (though it maintains a Buy rating), noting the stock has climbed to its highest level since Jan. 2008 even though there has been little change in the consensus earnings outlook.
- J.P. Morgan is concerned about the lack of comments on timing for the retail divestment, and it sees more risk of disappointment to existing and further corporate reforms with an increasingly fragile near-term refining outlook.
Aug. 25, 2014, 2:49 PM
- Sinopec (SNP +2.6%) says 37 companies have expressed interest in investing in its spinoff of 30% of its gas station business, but a skeptical WSJ Heard on the Street column says early signs of hoped-for reforms are not encouraging.
- Instead of boosting efficiency, SNP so far looks like it is reorganizing its priorities and raising capital, Abheek Bhattacharya writes; if this is as good as it gets for SNP's reforms, China investors should brace for disappointment.
- Shares are up nicely, however, after Chairman Fu Chengyu, in discussing SNP's 8% Y/Y rise in H1 profit, said he expects shale drilling costs in China to drop to $50M/well from $80M in three to five years.
Aug. 20, 2014, 10:24 AM
- Alimentation Couche-Tard (OTCPK:ANCUF) says it not pursuing a stake in China's Sinopec Sales (SNP, SHI), refuting an earlier report that it is among the companies rumored to be interested in buying a stake in the world's largest fuel retail network.
- Analysts had doubted Couche-Tard's interest, since a stake would give investors little control over Sinopec; Couche-Tard founder and CEO Alain Bouchard is a hands-on manager who makes acquisitions based on the belief that he can introduce his company's operational efficiency to the target and improve earnings. The chain has not historically made any passive investments of this kind, the paper said.
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