Glencore says oil storage stake sale to China's HNA partly done

Glencore says oil storage stake sale to China's HNA partly done
FILE PHOTO: The logo of commodities trader Glencore is pictured in front of the company's headquarters in Baar, Switzerland, July 18, 2017. REUTERS/Arnd Wiegmann/File Photo
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HONGKONG (Reuters) – Swiss-based trading and mining giant Glencore Plc <GLEN.L> has partly completed the sale of a 51 percent stake in its storage and logistics businesses to a unit of China’s HNA Group, although transfer of some assets is pending U.S. clearance.

Glencore in March agreed to sell the stake in HG Storage International Ltd, a vehicle that carries its petroleum products storage and logistics portfolio, to HNA Innovation Finance Group Co for $775 million (£574 million).

The commodities trader said on Friday that $579 million of the deal had been closed. It added that three assets located in the United States would be transferred to HNA in 2018 upon receiving clearance from the Committee on Foreign Investment in the United States (CFIUS), which reviews national security implications of foreign investments in U.S. firms or operations.

HNA said, in a separate statement, that the companies had completed the deal and would operate HG Storage International Ltd’s portfolio in Europe, Africa and the Americas as a joint venture. It did not mention any pending U.S. approval for the transfer of three U.S. assets.

A spokeswoman for HNA did not have an immediate comment on CFIUS approval.

Glencore had been looking to sell a bundle of its global oil storage stakes, following similar moves by rivals as a boom period for storage showed signs of nearing an end, Reuters reported earlier this year.

Demand for storage exploded following the oil price plunge in 2014 because the abundance of crude for immediate delivery meant traders could make millions by buying oil cheaply and storing it to resell later as prices recover.

But the appeal of storing oil for Western trading houses decreased when the market balance changed as a result of the OPEC oil cut at the end of 2016.

The partial completion of the deal will help improve HNA’s global position in the commodities sector, a spokesman for HNA Innovation Finance said in the statement.

The airlines-to-tourism conglomerate has moved increasingly into commodities and logistics in the past year. In September, it announced shareholder approval to buy Singapore’s CWT for $1 billion. CWT’s businesses include logistics services, commodity marketing, financial services and engineering services.

(Reporting by Kane Wu, additional reporting by Jennifer Hughes in Hong Kong and Clara Denina in London; Editing by Himani Sarkar)

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