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By Chen Aizhu
BEIJING, Dec 1 (Reuters) - China’s cabinet has approved the merger of state oil trader Zhuhai Zhenrong Corp and Macau-based conglomerate Nam Kwong Group, as part of a plan to consolidate state-owned enterprises to boost competitiveness.
The merger could boost the financial standing of Zhuhai Zhenrong, a former defence-sector affiliate that was created in the mid 1990s to deal in Iranian oil, oil industry officials said.
The State-owned Assets Supervision and Administration Commission noted the approval in a one-line statement on its website (www.sasac.gov.cn). A Zhuhai Zhenrong spokeswoman said details of the restructuring and a date for completion had not been finalised.
“The merger may at least help win Zhenrong larger bank financing for oil trading,” said one senior trader familiar with Zhenrong.
The two companies were first advised of the merger plan more than a year ago, sources told Reuters.
State-controlled Nam Kwong Group is involved in real estate, logistics and travel as well as small-scale natural gas and petrochemicals businesses, according to the company website.
Zhuhai Zhenrong imports about 240,000 barrels per day of Iranian crude oil, equal to about 4 percent of China’s total crude oil imports, under annual supply contracts with Tehran.
It mainly supplies the fuel to China’s Sinopec Corp , Asia’s largest refiner.
Sources familiar with Zhuhai Zhenrong said the merger would also bring Guangdong Zhenrong Energy Co, a Guangzhou-based oil and commodities trader, under the umbrella of the larger combined firm.
Guangdong Zhenrong is 44.3 percent owned by Zhuhai Zhenrong, according to company officials.
Reporting by Chen Aizhu and Beijing Monitoring Desk; Editing by Richard Pullin