Sinopec to Strengthen Investments in Upstream Assets

- Sinopec to Strengthen Investments in Upstream Assets

Monday, August 29, 2011
Dow Jones Newswires
HONG KONG
by Yvonne Lee

China Petroleum & Chemical Corp., or Sinopec, said Monday that it plans to strengthen investments in upstream oil and gas assets and unconventional resources over the next 5-10 years to further diversify its operations.

Chairman Fu Chengyu also said the company will accelerate the development of unconventional gas production, including shale gas and tight gas, in China and will disclose details of the development plan next year.

"We have 20 unconventional gas wells in China at the experimental stage. The output results are encouraging and better than expected," Fu said.

Shares of Sinopec ended up 6.7% at HK$7.49 Monday after Asia's largest refiner by capacity Sunday reported a better-than-expected 12% increase in first-half net profit to CNY41.17 billion from CNY36.80 billion a year earlier due to a stronger contribution from its oil production business, although its refining business recorded an operating loss due to rising fuel costs.

Fu said he is optimistic on the company's refining business prospects in the second half as crude prices will stay in a US $90-US $110 range.

However, he expects the global economy will be gloomy in the next 3-5 years if the U.S government launches a full-fledged third bond-buying program, commonly known as quantitative easing, or QE3.

"We hope to increase our cash level through the issuance of bonds to prepare any arising challenging," he said.

Sinopec said Sunday that it plans to raise up to CNY50 billion through the sale of domestic corporate bonds and the issuance of the convertible bonds in China.

Analysts expect Sinopec's refining margins to improve in the July-December period as crude prices eased recently, although the government price controls will still weigh.

"While the refining division is likely to continue to post a significant loss in the third quarter, we believe the second quarter was likely the peak for refining losses and the division could be close to break even in the fourth if Brent is around $107 or lower," Citigroup analyst Graham Cunningham said.

Copyright (c) 2011 Dow Jones & Company, Inc.

Oil & Gas Post

Promote Your Page Too
LINK

Petrofac, Petronas Sign MOUs, Strengthen Relationship

- Petrofac, Petronas Sign MOUs, Strengthen Relationship

Wednesday, July 13, 2011
Petrofac Ltd.

Petrofac has signed two memoranda of understanding (MOU) with Petroliam Nasional Berhad (PETRONAS).

The first MOU records the undertaking by Petrofac and PETRONAS to accelerate production from Block PM304, offshore Peninsular Malaysia, with a third phase of development. Petrofac owns a 30% equity share and is the Operator of PM304, which includes the Cendor and West Desaru fault blocks. Petrofac intends to accelerate the development of the West Desaru fault block by introducing an Early Production System which will involve both utilising current export facilities and also upgrading and deploying a Mobile Offshore Production Unit which is in the process of being purchased. This approach is expected to bring forward first oil production from West Desaru into the fourth quarter of 2012. The second phase development of the Cendor fault block, also in Block PM304, is expected to start up in the second quarter of 2013, bringing the overall production capacity of Block PM304 to around 60,000 barrels per day.

The second MOU outlines the intention between Petrofac and PETRONAS to collaborate in the area of competency development, capability building and education activities. This will involve a technical training partnership between Petrofac Training Services and Institut Teknologi Petroleum PETRONAS (INSTEP) to develop competency-based training for operations and maintenance personnel, as well as lecture and seminar programs with the Universiti Teknologi Petroleum (UTP).

Ayman Asfari, Petrofac Group Chief Executive, commented, "We have been working with PETRONAS since 2004, when we began the development of PM304 with the Cendor fault block. This is a relationship we value highly and which continues to deepen. We have today entered into two arrangements that will accelerate the development of PM304 and support PETRONAS in their continuous efforts in enhancing Malaysian capability in the oil & gas sector. In combination, we are providing a solution which addresses important strategic targets for PETRONAS and serves to underpin the strength of our Integrated Energy Services offering."

Dato' Shamsul Azhar Abbas, PETRONAS' President and Chief Executive said, "From the early stages of their entry into Malaysia's oil & gas upstream development PETRONAS has viewed Petrofac as one of its strategic partners. This view is reflected by the MOUs we have exchanged today. Going forward, PETRONAS will be able to access and benefit from a broader range of capabilities from across the Petrofac group, building on our existing partnership. We look forward to our continued collaboration with them."

Oil & Gas Post

Promote Your Page Too
LINK