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Exclusive - China's Sinochem to transfer WEPEC refinery stake to PetroChina, seeks trader role: sources

Exclusive - China's Sinochem to transfer WEPEC refinery stake to PetroChina, seeks trader role: sources
FILE PHOTO: A logo of Sinochem is seen outside an office building of Sinochem in Beijing, China February 21, 2017. REUTERS/Damir Sagolj/File Photo   -   Copyright  Damir Sagolj(Reuters)
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By Chen Aizhu

BEIJING (Reuters) – Chinese state-run oil and chemicals group Sinochem is in advanced talks to transfer its 33.6 percent stake in a debt-laden refinery to state giant PetroChina <0857.HK>, part of Sinochem’s plan to shed non-core assets ahead of a $2 billion (£1.57 billion) listing of its energy arm, people briefed on the matter said.

The move is in line with a transformational strategy pushed by Sinochem chairman Ning Gaoning to zero in on core assets as it finalises a merger with ChemChina that will create the world’s biggest industrial chemicals firm, worth around $120 billion.

It isn’t yet clear yet how much the stake in the 200,000 barrels-per-day (bpd) West Pacific Petrochemical Corp (WEPEC)refinery will be valued at, the people said.

Two sources, who have knowledge of WEPEC’s finances, estimated the refinery’s debt exceeded assets by nearly 50 percent at end-2017, due to deep losses in 2008 and 2014, even after improving refining margins over the past few years.

Though advanced, the talks on a deal may still take months or longer to finalise, they said, declined to be named as the discussions were not public.

Both Sinochem and PetroChina declined to comment.

(Reporting by Chen Aizhu; Editing by Kenneth Maxwell)

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