Sinopec to buy overseas assets from parent

China Petroleum and Chemical Corp (Sinopec) is to expand its overseas investments by acquiring oil and gas exploration assets in Kazakhstan and Russia from its parent for close to US$3 billion.

The proposed acquisitions will be conducted through a new 50-50 joint venture company, JV HK. The joint venture is formed by SHI, a wholly owned subsidiary of Sinopec, and Tiptop HK, a wholly owned subsidiary of its controlling shareholder, China Petrochemical Corp, according to a statement filed with the Hong Kong stock exchange.

"The transaction will expand the company's overseas business and enhance its resources and reserves so as to realise long-term and sustainable development," said the statement.

First, the joint venture plans to acquire 50 per cent of the total issued share capital of Caspian Investment Resources (CIR), which is principally engaged in oil and gas exploration and development and production activities in Kazakhstan, for US$1.57 billion. The vendor is Tiptop, a subsidiary of China Petrochemical.

CIR holds a 100 per cent interest in the Karakuduk and Arman oil fields and a 50 per cent interest in North Buzachi, Kozhasai, and Alibekmola. The remaining interests belong to an independent third party.

Second, JV HK is to pay US$776 million for 50 per cent of the total issued share capital of Mansarovar Energy Colombia together with the Mansarovar shareholder's loan from Sinopec Overseas Oil & Gas, a wholly owned subsidiary of China Petrochemical.