Energy

BP has declined Sinopec's offer to buy its assets

(Agencies)
Updated: 2010-07-30 14:54

'Strategic resources'

China has spent at least $21 billion on overseas resources in the past year to meet domestic demand, including the acquisition in April of a stake in a Canadian oil-sands project by Sinopec's parent.

"The chances of Sinopec winning bids for BP assets are small, as the European company is in the hands of the UK and US government and would never give strategic resources to Chinese majors easily," said He Wei, oil analyst with BOCOM International Holdings Co.

Sinopec has fallen 10 percent in Hong Kong trading this year, compared with the 4 percent decline in the benchmark Hang Seng Index.

Chinese oil demand

The slowing Chinese economy hasn't affected domestic oil-product demand so far, Zhang said. "We cannot see much impact right now," he said.

Related readings:  Sinopec reports 16.74% rise in refining in H1  BP replaces CEO Hayward, reports $17 billion loss  BP resuming oil spill work as storm fizzles  BP to sell $7 billion in assets to Apache

Sinopec's daily fuel sales haven't declined and the company's refineries are operating at more than 90 percent of their designed capacities, Zhang said. The Beijing-based refiner supplies 60 percent of the country's oil products including gasoline and diesel.

Fuel demand is poised to slow as Premier Wen Jiabao damps growth to curb inflation. The economy may grow 10.1 percent this year, according to the median of 27 economists' forecasts compiled by Bloomberg, down from last year's 10.7 percent.

China may face a surplus of fuel including diesel next year as refiners add oil-processing capacity, Fu Bin, deputy general manager of PetroChina Co's sales unit, said on May 27. The oversupply may rise to 80 million metric tons by 2015, Fu said.

Sinopec's August oil-processing volume will increase slightly from July, Zhang said, without elaborating. China's fuel demand usually peaks in summer from July to September.