Sinopec details sale plan of fuel unit

China Petroleum & Chemical (Sinopec) aims to complete by the third quarter a fund-raising exercise for its fuel marketing operations to help cut debt, fund shale gas development and fuel quality upgrade programmes.

The nation's second-largest oil and gas producer and the world's second-largest oil refiner plans to set up a company to hold its motor fuel distribution operation, which includes 30,500 fuel stations, the world's largest, chairman Fu Chengyu said.

"We want to bring out the hidden value of the business," Fu said. "By spinning it off as an independent entity, its decision-making and operations can become more market-oriented."

Sinopec said late last month it planned to sell up to 30 per cent of the fuel marketing operation to non-state entities. The decision is seen as an answer to Beijing's call for state firms in monopolistic industries to invite private participation in their operations as part of state enterprise reforms.

Fu said the operation had assets of 300 billion yuan (HK$375 billion), but they needed to be confirmed through an independent valuation exercise.

He said strategic investors would be given priority in the initial round of fund-raising since they could add value by providing expertise to better run the company's fuel-station network, which lags behind those in developed markets in non-fuel sales, which are more lucrative than fuel sales.