Chinese national oil company Sinopec is eyeing upstream merger and acquisition opportunities.
“Sinopec continues to acknowledge that its upstream resource foundations are weaker versus peers, and this could be an area of M&A. Given strong chemicals growth and spreads, it doesn’t expect to be making acquisitions in the chemicals segment near term,” reported investment bank Macquarie.
Presenting at the Macquarie DELTAH conference, Sinopec reiterated it sees $60 to $75 per barrel oil prices as a sweet spot where all businesses are quite profitable. Macquarie sees the current macro settings as very attractive. If oil prices do start to track above $75/b, some pressure starts to emerge with windfall profits tax, price caps and declining chemical margins, reported Macquarie.
Sinopec’s 10 hydrogen refuelling stations are already profitable after accounting for subsidy. Sinopec intends to build up to 1,000 stations during the 14th full year plan period, and expects unit costs of hydrogen distribution will fall dramatically – it is the largest hydrogen distributor and intends to accumulate more experience in hydrogen marketing. It intends to increase capacity in green hydrogen. Currently, it is effectively distributing grey hydrogen to kickstart refuelling demand, said Macquarie.
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