(Nov 3): China’s largest oil refiner Sinopec Group is in discussions to take over the nation’s dominant distributor of jet fuel, according to people with direct knowledge of the talks.
The tie-up talks between Sinopec Group — also known as China Petrochemical Corp — and China National Aviation Fuel Group Co were initiated by Beijing, said the people, who asked not to be named as the information isn’t public. The negotiations are still in progress, and there is no timetable or guarantee that the deal will proceed, they added.
Sinopec, which processes both imported and domestic crude into oil products, supplies jet fuel to CNAF, which manages the country’s airport fuelling network. From time to time, CNAF also balances domestic supplies by importing or exporting cargoes through trading arms including 51%-owned China Aviation Oil (Singapore) Corp.
If the tie-up goes ahead, Sinopec is expected to absorb all of CNAF’s assets and operations, one of the people said.
One of the world’s biggest civil aviation markets, China has seen demand rebound sharply from the pandemic as flights return to the skies. The country is expected to consume more than 40 million tonnes of jet fuel this year, or close to one million barrels a day — equivalent to about US$30 billion at prevailing prices.
CAO (Singapore) said earlier in an exchange filing that its controlling shareholder “will be undergoing a corporate restructuring with another corporate conglomerate,” without identifying the counter-party. That overhaul remains subject to further approvals and won’t have a material impact on normal business operations, the company said.
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Sinopec and CNAF didn’t immediately respond to requests for comment.
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