Shares of Sinopec Engineering, the refinery and chemical plant construction unit of China Petrochemical, slid 2.1 per cent in early trading on Thursday morning after the firm said it lost a US$1.85 billion contract.
China Petrochemical is also the parent of listed oil and gas major China Petroleum & Chemical, widely known as Sinopec.
Sinopec Engineering said “ongoing clarifications and negotiations” with Kazakhstan Petrochemical Industries had not yielded an agreement on “key commercial conditions and other aspects”.
This resulted in the mutually agreed termination of a contract signed in June last year to provide engineering, procurement and construction services to the state-backed chemicals maker in Central Asia.
No payment has been made by the Kazakhstan firm, and no revenue was booked by Sinopec Engineering on the contract.
The US$1.85 billion value of the contract will be deducted from Sinopec Engineering’s order backlog, which stood at 104 billion yuan (HK$131 billion) at the end of last year, reducing the backlog by roughly 11 per cent.