China's top refiner Sinopec plans to acquire filling stations
and petroleum assets in Hong Kong to become a first-tier oil
retailer there.
"The entities we are to purchase from China Resources Enterprise
will put us among the top four oil retailers in Hong Kong in terms
of filling stations. With more stations and support from our
mainland refineries, we are capable of competing head-to-head with
international energy giants in a transparent market environment,"
Sinopec spokesman Huang Wensheng told China Daily
yesterday.
Sinopec has entered into a framework agreement with China
Resources to acquire 20 oil and gas stations and other assets from
the latter with a preliminary offer of HK$4 billion.
The final agreement is expected to be signed sometime next
month, Huang hinted.
"We'll do the due diligence and double-check the value of those
entities. We believe the deal is worth it," Huang said.
Sinopec now owns 13 filling stations in Hong Kong. With the 20
new ones, not only can Asia's largest refiner leverage into
big-league oil retailing in Hong Kong, it can also make better use
of these assets, Huang said.
"Our refineries near Hong Kong in Hainan and Guangdong provinces
can provide stable and solid supply for these terminals at low
cost."
Moreover, the deals will help Sinopec gain market experience and
raise its brand awareness.
"It's a golden chance to improve our corporate image by
competing with global giants such as Exxon Mobil, Shell and Chevon
in a fully market-oriented environment like Hong Kong," Huang
said.
If any major liabilities are found in course of the due
diligence, the parties will have the right to adjust the terms of
the final agreement.
"The sides are expected to sign the final agreement in
mid-April, with an intention to complete the proposed transaction
by June 30 this year," China Resources Enterprise said.
The execution of the framework agreement represents another
major step in China Resources Enterprise's ongoing efforts to
divest its non-core assets to focus on core consumer
businesses.
"The disposal is a milestone in our progressive transformation
into a pure consumer company," said Song Lin, chairman of China
Resources.
(China Daily March 16, 2007)