Sinopec to IPO in Hong Kong

China’s leading oil company awakens to the advantages of going international.

State-owned China Petroleum & Chemical Corporation, Ltd or Sinopec, Ltd, also the world’s fifth largest company in sales, intends to IPO in Hong Kong by 2014.

The planned IPO is part of Sinopec's efforts to internationalise its business to counter rising extraction costs in domestic oil fields, according to Chinese media. Listing in Hong Kong is seen as a first step towards Sinopec’s international expansion. The company hopes to list in other exchanges following its debut in Hong Kong.

Media sources said Sinopec will have to consolidate eight of its engineering and construction subsidiaries for the Hong Kong IPO to push through. The subsidiaries to be merged are in the business of designing, engineering and constructing oil fields.

The eight companies are China Petroleum and Chemical Engineering Construction Company; China Petroleum and Chemical Group Fourth Construction Company; China Petroleum and Chemical Group Fifth Construction Company; China Petroleum and Chemical Group Tenth Construction Company; China Petroleum and Chemical Shanghai Engineering Company; China Petroleum and Chemical Ningbo Engineering Company; China Petroleum and Chemical Group Nanjing Engineering Company and China Petroleum and Chemical Luoyang Engineering Company.

Sinopec posted a net income of US$7.6 billion on revenues of US$273.4 billion in 2011. Its total assets stand at US$224.5 billion.