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Sinopec Shifts Global Oil Assets, Restructures Canadian Upstream Unit

A Chinese owner of Canadian oil sands projects, Sinopec Group, has given a 70% stake of its overseas upstream unit to two state-owned asset firms, a move which is part of efforts to reduce the operating and financing costs of Sinopec’s overseas operations. While the shift in ownership of Sinopec International Petroleum Exploration and Production Corp (SIPC) alters the firms involved in Sinopec’s stake in the Canadian energy sector, the transaction is a transfer of shares between Chinese firms, and not a new infusion of funds into Canada.

SIPC has been involved in a number of notable, multibillion dollar asset acquisitions, which include 2010’s C$4.82 billion share in Syncrude Canada Ltd and 2013’s US$4.65 billion (C$4.95 billion) stake in the American firm Apache Corp’s Egyptian operations. A 2011 acquisition of Canada’s Daylight Energy Corp for C$2.2 billion also went through, with SIPC also involved in projects in Sub-Saharan Africa, Russia, Brazil, and Kurdistan. With 28 overseas companies and 19 departments under SIPC, the unit has often been the overseas face of Sinopec Group, an organization with RMB182 billion (C$35.5 billion) in registered capital.

The remaining 30% of SIPC will remain with Sinopec Group, with asset firms China Chengtong Holdings Group Ltd and China Reform Holdings now holding a combined majority stake. China Reform Holdings has been actively acquiring state-owned energy assets, including via a US$2.32 billion dollar purchase of 50% of PetroChina’s Trans-Asia Gas Pipeline Company Limited in November. SIPC’s drive to boost efficiency and lower costs has also led to its relocating of 40% of its staff back to its headquarters last year, part of China’s campaign to reform its state-owned firms and a reaction to low energy prices and underperforming investments around the world.

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