China Petroleum & Chemical Corp (Sinopec), Asia's biggest refiner, said BP Plc has declined an offer by the Chinese company to buy some of its assets.
"We've talked to BP on some good assets, but they won't sell," Zhang Jianhua, senior vice president of the company known as Sinopec, said in an interview in Shanghai today, without naming the ventures. "We aren't in any talks with BP right now."
Europe's largest oil producer by volume plans to dispose of as much as $30 billion in assets in the next 18 months to raise cash to meet the costs of the Gulf of Mexico oil spill. BP said it has $16 billion of unused credit lines and plans to cut its debt to as little as $10 billion over the same period.
"BP's robust cash flow amidst resilient oil prices means they don't have to sell assets at dirt-cheap levels, especially for higher-quality assets," said Gordon Kwan, head of regional energy research at Mirae Asset Securities Ltd. "Expect Sinopec and others to come back to BP with higher bids."
The London-based company is considering selling fields in Colombia, Venezuela and Vietnam, a person with knowledge of the matter said this month. BP may also dispose of its 60 percent holding in Pan American Energy LLC, Argentina's second-largest oil producer, the person said then.
BP reported a record loss in the second quarter after the oil spill triggered by an April 20 explosion on the Deepwater Horizon rig. The shares closed at 413.45 pence in London trading yesterday, down 37 percent since the blast.
China has spent at least $21 billion on overseas resources in the past year to meet domestic demand, including the acquisition in April of a stake in a Canadian oil-sands project by Sinopec's parent.
"The chances of Sinopec winning bids for BP assets are small, as the European company is in the hands of the UK and US government and would never give strategic resources to Chinese majors easily," said He Wei, oil analyst with BOCOM International Holdings Co.
Sinopec has fallen 10 percent in Hong Kong trading this year, compared with the 4 percent decline in the benchmark Hang Seng Index.
Chinese oil demand
The slowing Chinese economy hasn't affected domestic oil-product demand so far, Zhang said. "We cannot see much impact right now," he said.
Sinopec's daily fuel sales haven't declined and the company's refineries are operating at more than 90 percent of their designed capacities, Zhang said. The Beijing-based refiner supplies 60 percent of the country's oil products including gasoline and diesel.
Fuel demand is poised to slow as Premier Wen Jiabao damps growth to curb inflation. The economy may grow 10.1 percent this year, according to the median of 27 economists' forecasts compiled by Bloomberg, down from last year's 10.7 percent.
China may face a surplus of fuel including diesel next year as refiners add oil-processing capacity, Fu Bin, deputy general manager of PetroChina Co's sales unit, said on May 27. The oversupply may rise to 80 million metric tons by 2015, Fu said.
Sinopec's August oil-processing volume will increase slightly from July, Zhang said, without elaborating. China's fuel demand usually peaks in summer from July to September.