BEIJING/SINGAPORE (Reuters) - State-run Sinochem Group has agreed on a framework deal with China’s private chemical giant Hengli Group to cooperate on imports of crude oil and marketing of refined fuel, Sinochem said in a statement late on Tuesday.
Sinochem gave little details on the agreement, but a source briefed on the matter said the two firms were looking to form a joint-venture in oil trading and marketing. The source did not want to be named due to rules on talking to media.
A cooperation will boost the trading portfolio of the state firm which operates only one major refinery in China and offer the private chemical group expertise in global oil trading.
Hengli is expected to start trial runs at a 400,000-barrel-per-day new refinery complex in the Changxing island of northeast Dalian city in October this year, Sinochem said.
A second source with knowledge of the deal said Sinochem was likely to purchase crude on behalf of Hengli and could start hunting for cargoes around mid-2018.
A Sinochem spokeswoman said she was unable to comment on any details of the agreement.
This is not the first time Sinochem has tied up with a private entity. The group, an old-time oil and chemicals trader that flourished in the 1990s, owns part of Shandong Hongrun Petrochemical Co, an independent refiner based in east China.
Hengli is already operating a 6.6 million tonnes per day plant making purified terephthalic acid (PTA), the world’s largest. PTA is a feedstock for producing polyester.
The firm, with businesses spanning machinery and property, had an annual turnover of 251.6 billion yuan ($38.56 billion) in 2016, according to its website.
($1 = 6.5250 Chinese yuan renminbi)
Reporting by Chen Aizhu in Beijing and Florence Tan in Singapore; Editing by Himani Sarkar