Chinese refining giant Sinopec has launched a unit to invest in refining and petrochemicals assets outside China to expand on markets with growing demand and easily available feedstock, company officials have told Reuters.
Sinopec is currently building the team at Sinopec Overseas Investment Holding and allocating budgets for the entity that will invest, build, and operate refineries outside China.
Sinopec looks to “expand overseas refining and chemical business by taking full advantage of the group’s core strength,” Zhao Dong, president of parent company China Petrochemical Corp, said earlier this year in an in-house newsletter cited by Reuters.
Sinopec hasn’t revealed which locations it is targeting, but an anonymous senior Sinopec official told Reuters the company would look with priority at locations with easy access to feedstock and expectations of demand growth.
China has limited approvals of domestic refineries amid overcapacity and slowing fuel demand growth, so looking at other locations could be a win for the biggest oil refiner in Asia.
Earlier this week, Sinopec said it was not interested in acquiring Shell’s refinery or petrochemical plant in Singapore but would instead invest in Saudi Aramco’s Jafurah natural gas project alongside TotalEnergies. Saudi Aramco is currently in a «listening phase» on proposals from refining giant Sinopec and Total for a slice of a shale gas development project worth about $10 billion. Saudi Aramco has said it expects the giant gas field to produce about 2 billion cubic feet of gas per day by 2030, at a total cost of $24 billion.
Sinopec, for its part, reported a 20.1% decline in its net profit for the first half of 2023, amid lower international crude oil prices and weaker-than-expected fuel demand recovery in China. In the chemicals division, Sinopec flagged weak domestic demand and reported an operating loss for the January-June period compared to a small profit for the same period of 2022.