Sinopec Cuts Overseas Spending, Oil Output By 22% | Independent Newspapers Limited
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Sinopec Cuts Overseas Spending, Oil Output By 22%

Posted: May 1, 2015 at 4:27 am   /   by   /   comments (0)

By Sola Alabadan, Lagos


Anxiety grips Nigeria and 26 other where Sinopec Group have investments, as this China’s second-largest state energy group says it will cut overseas investment by 22.2 percent this year and trim inefficient oil output abroad.

While Sinopec Group acquired Addax Petroleum in 2009, the organisation also completed the purchase of 20 oil wells belonging to TOTAL E&P in Southern Nigeria in a deal worth about $2.5 billion in October 2012.

The decision to cut overseas spending, according to the organisation, is part of measures to be taken in response to inspections by the country’s graft watchdog.

Sinopec, which has investments in 27 countries including Nigeria, Russia and Iraq, planned to trim overseas output this year by 8.4 million barrels, according to a statement posted on the CCDI’s website, detailing problems uncovered after a month-long inspection late last year.

That would be roughly 2.5 percent of total output from Sinopec Corp, the state oil group’s listed entity.

Chinese President, Xi Jinping, has warned that corruption threatens the survival of the ruling Communist Party and his two-year anti-graft campaign has brought down scores of senior officials in the party, government, military and state-owned enterprises.

As part of the campaign, the China Central Commission for Discipline Inspection (CCDI) is stepping up inspections at conglomerates owned by the central government.

Apart from similar problems uncovered at other state-owned firms such as nepotism, big-ticket procurement without open tenders and using public funds for holidays, CCDI said some of Sinopec’s overseas investments had generated low returns or even no revenue after years of input.