Sinopec to acquire $3bn of assets from parent company

China's largest refiner is set to form a JV by purchase it's parent company's overseas oil and gas assets.

Asia’s largest refiner, China Petroleum and Chemical Corp (Sinopec Corp will form a joint venture with its parent company, China Petrochemical Corp (Sinopec Group to purchase $3bn of overseas assets held by the latter. The state-owned giant believes the transaction will offset heavy refining losses at home.

The deal will be a 50/50 partnership betweens the two companies and will boost Sinopec Corp’s proven reserves by 9.1% to 3.1bn barrels of oil equivalent, as well as increasing annual crude production by 11.2% to 365m barrels. Sinopec Corp will pay $1.5 billion for the assets, and will receive funding from its parent for the second half.

Sinopec Group has spent over $40bn on global assets within the last three years, while Sinopec Corp has made just one $2.46bn acquisition - in Angola - in 2010.

At least half of the Group’s overseas oil and gas assets are of poor quality, or in troubled nations such as Syria, Argentian or South Sudan. Neither party disclosed exactly which assets Sinopec Corp planned to acquire from its parent.