China Petrochemical Corp., the parent of Asia’s biggest refiner, bought a 10 percent stake in an oil and gas field in Angola from U.S.-based Marathon Oil Corp. (MRO:US) for $1.52 billion.
The purchase brings China Petrochemical’s stake in Block 31 to 15 percent, the parent of China Petroleum and Chemical Corp., or Sinopec, said in an e-mailed statement on June 21. China Petrochemical bought a 5 percent stake in the block from Total SA in 2011 for $983 million.
Increasing its stake in the block, currently operated by BP Plc (BP/), will add 14,600 barrels of oil per day for China Petrochemical, it said in the statement. The deal is pending approval from the governments of China and Angola.
Sinopec’s shares dropped to their lowest level in almost a year in Hong Kong trading. The stock fell 4.1 percent to HK$5.10 as of 11:51 a.m local time. The city’s benchmark Hang Seng Index dropped 1.7 percent.
Sinopec shares likely fell with other oil companies on concerns that a credit crunch for China’s banks could hamper borrowing, and that the U.S. Federal Reserve will begin to draw down its economic stimulus, said Shi Yan, an analyst at UOB-Kay Hian Ltd. in Shanghai.
Adding overseas assets should be good news for Sinopec and its parent, as upstream businesses traditionally provide better margins, Shi said. “The positive news was just buried by all the negative concerns,” Shi said.
Sinopec is likely to be the eventual home for the Angolan purchase, although it could take a long time to transfer the assets between the parent and the listed company, said Shi.
PetroChina Co. (857), the country’s biggest oil producer, declined 2.3 percent to HK$7.92, while Cnooc Ltd. (883), China’s biggest offshore oil explorer, dropped 2.5 percent to HK$12.40.
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