Sinopec in talks with foreign partners on potential ventures

Sinopec in talks with foreign partners on potential ventures

Loretta Ng and Stephen Voss, Bloomberg/Hong Kong/London

China Petroleum & Chemical Corp. (Sinopec), the country's largest oil refiner, said it's in talks regarding potential ventures with foreign companies including BP Plc, which wants a greater share of the industry as Chinese economy surges.

Huang Wensheng, a Beijing-based Sinopec spokesman, said such negotiations are part of its "everyday business" and that he's not aware of any talks for BP to acquire a stake in the company. The Financial Times reported that Sinopec is discussing a partnership with BP, citing an unidentified BP executive. It didn't give details of any possible agreement.

BP Chief Executive John Browne is already building ties in China, the world's fastest-growing major economy, including a 2001 agreement with a Sinopec unit to build a $2.7 billion ethylene plant in Shanghai. BP, the world's second largest publicly traded oil company, formed a partnership with Sinopec in 2002 to open 150 filling stations a year in the eastern province of Zhejiang, targeting 500 stations within three years.

"It makes sense for BP to get a foot in the Chinese market," Klaus Hagedorn, who manages about $900 million at Metzler Investment GmbH in Frankfurt, said in an interview on Thursday. "China is a very energy hungry country."

Chinese oil companies are increasingly looking abroad for investment and access to oil reserves. CNOOC Ltd., China's biggest offshore oil producer, sought to buy Unocal Corp. of the U.S. earlier this year, before it was barred by U.S. lawmakers.

"Sinopec is always in talks with various multinational companies, including BP, all the time," Huang said. "Our partnership with BP has been there for some time. We've been working together on some projects since years ago. There is always room to do business together."

BP spokesman David Nicholas declined to comment.

"Virtually all of our ventures in China are joint ventures," Nicholas said. "As with all joint ventures, we are always in discussions with our partners about possible activities, but we would we never talk about current discussions."

UK Prime Minister Tony Blair visited China last month with a delegation of business leaders including Gary Dirks, president of BP China Ltd.

Blair's spokesman, Tom Kelly, told reporters he is "not aware" of any talks between BP and Sinopec. "It would be a commercial matter."

Shares of Sinopec, which have gained 5.5 percent this year, were at HK$3.375, up 0.8 percent, in Hong Kong while BP shares were down 12.5 pence, or 2 percent, at 621.5 pence at 12:16 p.m. in London. Sinopec has lagged this year's 47 percent advance by PetroChina Co., the nation's largest oil producer, amid declining profit margins caused by soaring crude-oil costs.