MOSCOW (MRC) -- PetroChina Co. and China Petroleum & Chemical Corp., the nation’s two largest oil companies, jumped by their daily trading limit in Shanghai on Monday on speculation the government is considering consolidating the industry, said Hydrocarbonprocessing.
"Big oil names are soaring because of speculation that the government is studying mergers in the industry," said Clement Cheng, an equity trader at RBC Investment Management Asia in Hong Kong. "The oil sector has been undervalued for a long time."
PetroChina jumped 10% to 14.65 yuan, the highest in more than five years, and China Petroleum, or Sinopec, also rose 10% to 8.56 yuan at the close in Shanghai. The Shanghai Composite Index climbed 3% to 4,527.396.
Separately, the Economic Information Daily reported Monday that China’s state-assets regulator may cut the number of government-owned enterprises to 40 from 112 through mergers and restructuring. The report, which didn’t specifically mention Sinopec or PetroChina, cited people it didn’t identify.
China National Petroleum Corp., the state-owned parent of PetroChina, hasn’t received any information from the government, nor has it spoken with Sinopec about a merger, media director Gong Kai said. A Beijing-based Sinopec spokesman couldn’t be reached for comment.
A merger of the two Chinese oil groups goes against China’s own policy of allowing markets to play a greater role in the allocation of resources, Bloomberg Intelligence analyst Grace Lee said.
"A merger of the two will only create more monopoly, not less," she said. "I don’t see it helping with overseas acquisitions in any way, as a bigger company will certainly invite more antitrust concerns."
PetroChina will announce first-quarter earnings on 27, April. Profit may drop 71% to 9.98 billion yuan, based on the average of three analyst estimates compiled by Bloomberg. Sinopec may post a 1.88 billion yuan first-quarter loss later this week, compared with a 13.5 billion yuan profit a year ago.
As MRC informed earlier, is in plans to commission a new crude oil refinery in China in late 2015. To be located at Anning in Yunnan province of China, the refinery will have a crude processing capacity of 260,000 bpd.
PetroChina Company Limited, is a Chinese oil and gas company and is the listed arm of state-owned China National Petroleum Corporation, headquartered in Dongcheng District, Beijing. It is China's biggest oil producer.
China Petrochemical Corporation (Sinopec Group) is a super-large petroleum and petrochemical enterprise group established in July 1998 on the basis of the former China Petrochemical Corporation. Sinopec Group's key business activities include the exploration and production of oil and natural gas, petrochemicals and other chemical products, oil refining.
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