HSBC Global Banking and Markets operations around the world
Meeting China's thirst for oil
Published: 15 May 2008
HSBC advises Fujian Refining in USD4 billion petrochemical deal with Saudi Aramco and Exxon Mobil
With demand reaching 7.5 million barrels per day (mb/d) in 2007, China is the world's second largest oil consumer. The International Energy Agency (IEA) predicts the figure will reach 7.9 mb/d in 2008, accounting for about 40 per cent of the world's increased demand.
| Feb y-o-y growth | 2008 y-t-d (as of 18 March) |
12-month rolling growth |
3-month rolling growth |
IEA 2008 est | |
|---|---|---|---|---|---|
| Oil products | 724 | 574 | 334 | 566 | 401 * |
| 11.3% | 8.5% | 4.9% | 8.3% | 6.0% | |
| Gasoline | 286 | 183 | 96 | 171 | 80 |
| 25.8% | 14.7% | 7.8% | 13.5% | 6.4% | |
| Middle distillates | 433 | 447 | 241 | 450 | 268 |
| 17.4% | 17.2% | 9.1% | 17.0% | 9.4% | |
| Fuel oil | 29 | -33 | -45 | -35 | -30 |
| 4.3% | -4.7% | -5.4% | -5.0% | -4.0% | |
| Crude oil | 670 | 351 | 483 | 390 | - |
| 10.6% | 5.2% | 7.4% | 6.0% | - |
Notes: * - Calculated with the exclusion of naphtha
Source: Chinese National Bureau of Statistics, Reuters, HSBC estimates
Even as the nation’s oil refineries operate near full capacity and with more projects underway, China knows that supply must increase in order to meet the rising demand. As Chinese policymakers encourage domestic producers to look overseas for investment, foreign firms have been able to gain a foothold in China’s petroleum/petrochemicals industry.
HSBC acted as a Financial Adviser on the RMB30 billion (USD4 billion) deal to create Fujian Refining and Petrochemical Company Limited, China's largest and first fully-integrated petrochemical facility.
HSBC was the financial adviser for the project, a joint venture established in March 2007 by Sinopec and Fujian Province with Saudi Aramco and ExxonMobil. Sinopec owns 50 per cent of the joint venture, with ExxonMobil and Saudi Aramco holding 25 per cent each.
HSBC successfully guided the joint venture partners to establish a common financing platform, and created financing solutions to benefit each of the partners. The deal demonstrated HSBC’s ability to help clients from different countries and cultures to cooperate successfully on significant and complex projects.
The lender group, which comprised 11 major Chinese banks and Sinopec Finance Company developed debt facilities, and dual-currency working capital loans, that set new benchmarks for pricing and execution efficiency.
Find out more about HSBC's project and export finance business.
Get details about Global Banking and Markets services in China.
A pipeline between India and China
HSBC was sole financial adviser to GAIL (India) Ltd's acquisition of a stake in China Gas Holdings Ltd, one of China's major natural gas distributors.
GAIL acquired a 10 per cent share in China Gas Holdings, and as part of the agreement, will subscribe to 210 million new shares in the company. The deal was a follow-through of the relationship formed with GAIL when HSBC acted as book-running lead manager for its USD360 million equity offering.
Within 20 days of HSBC’s appointment, the deal was completed. This included site visits, valuations, acquisition of government permits and approval from the Indian Oil Corporation board.
The new centre of the world
Today's China is generating enough economic activity both to drive neighbouring emerging markets and to buoy developed economies during the current slowdown. In a series of special reports, we show how HSBC is serving as a bridge to the rest of the world for this emerging giant.