China's state-owned oil and gas group Sinopec has partnered with two government asset firms to restructure its overseas upstream unit, Sinopec International Petroleum Exploration and Production Corp (SIPC), in a context of low oil prices.
The strategic investors, which are investment platforms under the State-owned Assets Supervision and Administration Commission of the State Council (SASAC), are expected to optimise the company's capital structure, cut the operating cost and reduce financing cost. China Chengtong Holdings Group and China Reform Holdings will take a combined 70% interest in SIPC, while Sinopec will retain a 30% stake and operatorship in the company.
SIPC is undergoing internal reshuffle, as the company spent billions of dollars on large oil and gas acquisitions between 2009 and 2013, including deep-sea concessions in Brazil and oil sands projects in Canada. The profitability of these investments has eroded since the fall of global oil prices in June 2014.