A China Petrochemical (Sinopec) Corp. attendant fills up a customer’s car with gasoline at a gas station in Shanghai on March 21.

China, which agreed last week to acquire a share in a Kazakh oil producer, will provide financing for overseas asset bids by domestic oil companies taking advantage of slumping energy prices, an industry official said.

Under the stimulus plan, the government would take steps to increase oil-product stockpiles, boost fuel demand, adjust tax policies and extend more loans to petrochemical companies, the State Council, or Cabinet, said on February 19. The measures will add to the 4 trillion yuan (US$585 billion) of spending announced in November to support the economy amid the global recession.

PetroChina Co.’s shares rose 0.3 percent to close at HK$6.81 in Hong Kong while China Petroleum & Chemical Corp. climbed 0.5 percent to HK$5.97. PetroChina and Sinopec, as China Petroleum is known, are the nation’s largest oil companies. Cnooc Ltd. gained 1.3 percent to HK$8.75.

“This will be a big boost for Chinese oil companies to go abroad amid falling oil costs,” Qiu Xiaofeng, an oil analyst with China Merchants Securities Ltd., said by telephone in Shanghai Friday.

A draft of the energy stimulus plan proposed that the government take advantage of low prices and stockpile oil products to help reduce an oversupply in the domestic market, an industry official said in February.

Overseas oil

PetroChina last week agreed to buy a 50 percent share in AO Mangistaumunaigas for as much as $1.4 billion after China agreed to lend $10 billion to Kazakhstan, the largest energy producer in the former Soviet Union after Russia. State-owned KazMunaiGaz National Co. will hold the other 50 percent.

China had signed three loan-for-oil agreements with Russia, Brazil and Venezuela earlier this year, tapping its $1.95 trillion foreign-exchange reserves to buy energy assets after oil prices declined 66 percent from a record in July last year.

PetroChina’s parent China National Petroleum Corp. is in discussions with BP Plc, Exxon Mobil Corp. and Royal Dutch Shell Plc to jointly develop overseas fields, Jiang Jiemin, chairman of PetroChina, said in an interview last week. He is also China National Petroleum’s president.

PetroChina, Asia’s largest crude-oil producer, is seeking opportunities to buy assets in “non-geopolitically sensitive” regions, Jiang said.

Stimulus measures

Domestic refineries with a capacity of less than 2 million metric tons a year, or 40,000 barrels a day, would be phased out by 2011, the industry official said Friday. The closures would be announced as part of the energy stimulus package, he said.

The government is considering additional stimulus measures to boost consumption and bolster growth just as its economy shows more signs of recovering. Crude-oil processing rose for the first time in five months in March while industrial output climbed 8.3 percent from a year earlier, up from 3.8 percent in the first two months.

China would issue some “guideline” policies and continue to use fiscal and taxation measures to spur an expansion, the official China Securities Journal reported on April 13, citing Gao Huiqing, a researcher at the State Information Center as saying on April 11.

On the same day, Premier Wen Jiabao, said in an interview with state media that China would “closely” monitor changes in the domestic and world economy and “hammer out” new response plans when needed.

Source: Bloomberg