Sinochem Considers Mainland IPO for Oil Trading Unit

(Bloomberg) -- Sinochem Group is considering listing its oil trading and refining unit on a mainland Chinese exchange after earlier letting a Hong Kong initial public offering application lapse, people with knowledge of the matter said.

The state-owned conglomerate is considering Shanghai as a potential venue for a Sinochem Energy Co. share sale, said the people, who asked not to be identified because the information is private. Sinochem has approached China Securities Regulatory Commission about the possible mainland deal, according to one of the people.

A Sinochem Energy IPO is expected to accompany the long-awaited tie-up between its parent and fellow state-owned firm China National Chemical Corp., known as ChemChina. The merger would create a sprawling conglomerate stretching from oil refining and trading to agrochemicals and fertilizers.

Sinochem’s press office referred inquiries about IPO plans to its latest public information. Nobody from CSRC responded to a fax seeking comment.

While Sinochem is now considering Shanghai as an IPO venue for the unit, a Hong Kong stock offering is still a possibility, the people said. Sinochem Energy’s July application to list in Hong Kong expired in January. Bloomberg News reported the company was seeking to raise about $2 billion.

The possible listing in Hong Kong received tepid interest over concerns an economic slowdown in China would hurt oil demand and that the nation’s fuel makers may struggle because of a glut of refining capacity, said the people.

Last year’s Hong Kong IPO filing revealed some details of the rarely seen inner workings of a Chinese state oil trader. Sinochem Energy handled about 2.7 million barrels of oil and fuels a day, on a par with some of the world’s largest merchant traders such as Mercuria Energy Group Ltd. and Gunvor Group Ltd. Its 37.4 million barrels of storage capacity also makes it the largest commercial tank operator in China.

To contact Bloomberg News staff for this story: Sarah Chen in Beijing at schen514@bloomberg.net;Alfred Cang in Singapore at acang@bloomberg.net;Steven Yang in Beijing at kyang74@bloomberg.net;Crystal Tse in Hong Kong at ctse44@bloomberg.net;Ramsey Al-Rikabi in Singapore at ralrikabi@bloomberg.net

To contact the editors responsible for this story: Pratish Narayanan at pnarayanan9@bloomberg.net, ;Jessica Zhou at jzhou75@bloomberg.net, Timothy Sifert, Alexander Kwiatkowski

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With assistance from Bloomberg