Saudi Aramco in talks to buy some of China’s CNPC assets -sources

Saudi Aramco, the world’s biggest oil producer, is in talks with China National Petroleum Corp (CNPC) to buy some of the Chinese oil company’s marketing, retail and refining assets, people familiar with the matter told Reuters.

The deal value is currently estimated around $1bn to $1.5bn, although final valuations and assets are subject to change, they said.

Saudi Aramco, which has been looking to buy more refining and retail operations as a way to sell more of its output, is in discussions to buy at least one of CNPC’s refineries and some 300 retail outlets, one of the people said.

Saudi Aramco declined to comment and CNPC officials were not available for comment. Sources declined to be identified as the discussions are confidential.

It remains unclear when the deal will be finalised, the people said, adding that discussions started about five months ago.

Saudi Aramco has hired Deutsche Bank to advise on the transaction, while CNPC is working with HSBC Plc and one other mainland bank on the deal, according to the sources. Deutsche Bank and HSBC declined to comment.

CNPC’s planned asset sale comes after China’s state-controlled oil giant Sinopec Corp raised $17.5bn last year by selling a 29.9 per cent stake in its retail business, ahead of a potential IPO in 2016.

Saudi Aramco has been keen to make inroads into more advanced chemicals to diversify away from its oil and basic petrochemicals businesses. Chief Executive Khalid al-Falih told a conference in January that it was “even more committed today to diversifying and investing in new sectors” despite the impact of oil price declines.

In March, the state-owned oil giant signed a new $10bn loan deal with 27 financial institutions, partly to finance the acquisition of a stake in Laxness, a German rubber firm with a market value of $4.7 billion, according to Thomson Reuters data.

Bloomberg News first reported the Saudi Aramco-CNPC talks.