According to a Reuters report, Sinopec is in preliminary negotiations with Singapore's oil trader Hin Leong Trading Pte Ltd, and plans to acquire a portion of equity in the oil storage terminal (Huanyu Storage) of the Xinglong Group.
Hin Leong (Xinglong Group, also the parent company of Ocean Tankers), one of Singapore ’s richest people, Mr. Lin Enqiang was founded in 1963 and has now developed into the world ’s 16th largest tanker operator, Asia ’s largest marine fuel or marine fuel supplier 130 various tankers!
According to sources, Xinglong Group suffered about $ 800 million in losses due to futures trading and plans to raise funds through the sale of certain assets. It is reported that the assets to be sold are mainly the Huanyu Storage Terminal, a joint venture between Xinglong Group and PetroChina.
The move is intended to raise cash to pay down debt. Due to inability to repay the loan, Xinglong Group has filed for bankruptcy protection in Singapore to restructure huge debts.
The terminal has an independent and complete integrated marine infrastructure and is the only independent super tanker terminal on Jurong Island in Singapore. Xinglong Group currently owns 41% of Huanyu Warehousing, PetroChina Singapore holds 25%, and Macquarie holds the remaining 34%.
An official, who asked not to be named, said Sinopec was interested in the transaction and is evaluating the quality and cost of the assets. It is not clear how many shares Sinopec may be interested in buying, or the potential purchase price.
Why did Hin Leong go bankrupt
The collapse of oil prices and the new crown epidemic have hit oil demand and pushed up Xinglong's costs. For the first time, Singapore oil trader Xinglong Trading Company had a big rollover. According to the Splash247 website, Hin Leong Trading (Pte.) Ltd and its subsidiary Ocean Tankers (Ocean Tankers) have applied to the court for bankruptcy protection.
Statistics show that Xinglong Group owes a total of US $ 3.85 billion in loans to 23 banks.
Doing long causes a rollover
Generally speaking, large crude oil traders usually do crude oil hedging. If there is no hedging to save a little money, something is a big deal.
But this time, there was no hedging and hedging.
It is believed that China's epidemic will soon be contained, and oil demand will rebound significantly. And because oil prices have fluctuated and prices have been low in the past few years, he bets that oil prices will rise to cover previous losses.
So boldly pressing oil prices will rise.
However, people are not as good as heaven:
1. The bet is right, China does control the epidemic.
2. It is not predicted that Saudi Arabia and Russia will engage in things.
3. It is not predicted that the global epidemic will be so severe. Caused the global oil demand to plummet. As a result, oil prices fell directly into single digits. The prices of oil futures in May were all negative.
The global benchmark Brent crude oil price fell from more than US $ 70 per barrel in early January to the lowest today at US $ 15.98 per barrel.
As prices plunged, banks demanded more and more margin to cover the bullish bets it placed. In addition, as prices fell, the value of the company's inventory shrank rapidly, which meant that Xinglong needed to mortgage more barrels to maintain its credit line.
Under the squeeze of these two ends, Xinglong's funds were quickly used up. The bank began to panic and canceled his quota directly.
Huanyu warehousing China Petroleum accounted for 25% of the shares
PetroChina invested in Universal Storage in 2006, initially accounting for 35%. Xinglong Group owns the remaining 65% of the shares. Industry insiders say PetroChina has recovered its initial investment of S $ 750 million within 36 months.
In 2016, China National Petroleum United Xinglong Group sold terminal shares to Macquarie, a total of 34% of the shares were sold, and the total value of the transaction was reported to reach US $ 550 million. After the completion of the sale, the share of PetroChina shares fell to 25%.
Regarding the rumors of Sinopec's possible shareholding, PetroChina executives said that they have not received relevant information from Xinglong Group regarding the sale of Huanyu warehousing.
About Universal Storage:
According to 2016 transaction estimates, the total value of Huanyu warehousing exceeds US $ 1.5 billion.
Insiders pointed out that Huanyu warehousing is the most attractive asset in the hands of Xinglong Group.
With a total reserves of 2.33 million cubic meters, Universal Storage is the largest independent gasoline storage terminal in Singapore and one of the largest independent storage in the world.
The terminal facilities include 78 specially customized storage tanks and 15 berths, including 2 deep water berths, which can simultaneously operate two fully loaded super tankers. The terminal is the only independent super tanker terminal on Jurong Island in Singapore.
