Beijing, China — ESI-AFRICA.COM — 12 January 2011 – China’s biggest energy producer “’ has agreed to form a joint venture with British refiner Ineos Group Holdings plc, gaining a valuable foothold in Europe as it continues to accelerate its global expansion.
Petro-China and Ineos, the U.K.’s largest privately-held company, will refine and trade oil products at the Grangemouth refinery in Scotland and the Lavera plant in southern France, the Chinese company said in a statement here. Both of Ineos’s facilities have oil-processing capacities of about 210 000 barrels a day, according to the statement.
The venture is in addition to US$6.9 billion of acquisitions in countries from Australia to Singapore over the past two years as Petro-China seeks to meet China’s growing energy demand. In the next decade, the Hong Kong-listed energy producer is planning to spend at least US$60 billion on global assets to increase reserves and boost fuel production.
“This is an important part of Petro-China’s long-term strategy to create a global oil trading business,” said Neil Beveridge, a Hong Kong-based analyst at Sanford C. Bernstein & Co.
“You’ve seen Petro-China establish refining and storage bases in Japan and Singapore, and now we have this. The next logical move in the chess game is for Petro-China to secure refining and storage assets in North America,” he added.
Petro-China and Royal Dutch Shell plc agreed in November to study energy projects in Canada and China. The Chinese company’s last overseas acquisition was completed in August when it teamed up with Shell to buy Australian gas producer Arrow Energy Limited for US$3.2 billion.
European oil companies such as Shell and Total SA are selling plants after weak demand for fuels caused by the worst recession since World War II cut refining profits.
Petro-China will provide Ineos with an ‘injection of capital,’ the Chinese company said in a statement, without elaborating. The venture is expected to be set up in the first half of 2011.