ExxonMobil denies rumours of share sale

Global oil giant ExxonMobil, denied knowledge yesterday of plans to sell its holdings in Sinopec, China's second-largest oil company.

An ExxonMobil spokeswoman was commenting on a report in the Financial Times newspaper that ExxonMobil is considering selling its 19 per cent stake in Sinopec, raising more than US$1 billion in cash, reported Thursday's China Daily.

The spokeswoman said she was not aware of the firm's moves with regard to this.

A Sinopec spokesman also said the company had not been informed of any plans by ExxonMobil to sell its stake.

ExxonMobil, Royal Dutch/Shell and BP bought a total of 6.9 billion shares in Sinopec in 2000 at HK$1.59 (20 US cents) per share to support Sinopec's initial public offering in Hong Kong, New York and London. ExxonMobil bought 3.2 billion shares in Sinopec, while Royal Dutch/Shell and BP hold a combined 3.7 billion shares.

Shell and BP sold their stakes in Sinopec earlier this year when Sinopec's share price more than doubled over the IPO price. The two companies raised over US$740 million each, more than double the investment they made in 2000.

Analysts have been expecting ExxonMobil to follow suit. Although Sinopec's share price has dropped to lower than HK$3.13 (40 US cents), the price at which Shell and BP sold the stakes, ExxonMobil still could reap a windfall if it decides to place the shares on the market.

Sinopec shares fell 3.3 per cent to HK$2.98 (38.2 US cents) on Hong Kong stock market yesterday.

The Financial Times yesterday reported that ExxonMobil is planning to sell at least part of its holding in Sinopec.

But the report said that no decision had been made on whether to go ahead with the sale so far. And the timing and size of any offering would depend on market conditions, the report added, citing people involved in the discussions on it.

Analysts said it is reasonable for the foreign partners to withdraw from Sinopec because stock market investment is not a core-business for oil giants.

But they worried that the sell-off could create liquidation concerns among investors that may drag down the share price in the short-term.

Source: China Daily