Sovereign Wealth Fund Institute

According to the press release, “Saudi Aramco and China Petrochemical Corporation (Sinopec) have agreed to formation of a joint venture related to the ongoing development of Yanbu Aramco Sinopec Refining Company (YASREF) Limited, formerly the Red Sea Refining Company.

Presided over by His Excellency, Ali Ibrahim Al-Naimi, Minister of Petroleum and Mineral Resources and chairman of the Saudi Aramco Board of Directors, leaders of the two companies — Khalid A. Al-Falih, president and CEO of Saudi Aramco, and Fu Chengyu, chairman of the Sinopec Group – formally announced the agreement in Dhahran on Saturday.

The joint venture agreement follows a Memorandum of Understanding between Saudi Aramco and Sinopec, signed in March 2011. Following Saturday’s JV agreement, Sinopec will hold equity interest of 37.5 percent in YASREF, with Saudi Aramco holding the remaining 62.5 percent.

The YASREF joint venture marks another significant phase of several progressing partnerships between Saudi Aramco and Sinopec across the hydrocarbon value chain in Saudi Arabia and in China. Saudi Aramco and Sinopec both bring significant knowledge and expertise to the joint venture, which represents the strengthening of their strategic partnership to enhance the trade of transportation fuels between a major energy producer and a major consumer. In-Kingdom refineries, such as the one being built by YASREF, possess the location advantage to supply domestic and international markets to the East and West.

“Our mutually progressing partnership with Sinopec has continued to flourish across the hydrocarbon value chain from crude oil supply to refining and petrochemicals in Fujian to YASREF today, and is a testimony of our continued efforts to enhance collaboration between the two companies,” Al-Falih said. “YASREF, being Sinopec’s first international downstream investment, will definitely strengthen further the longstanding bond between the two companies, and I am confident it will also yield mutual benefits for the Kingdom of Saudi Arabia and the People’s Republic of China.

“YASREF is uniquely placed to seize market opportunities, and it demonstrates our unwavering commitment to significantly grow our downstream portfolio, and in creating win-win partnerships for us and our stakeholders,” Al-Falih added. “Among YASREF’s many contributions will be to provide training, employment and industrial and economic development opportunities for Saudi nationals and for the growth of local enterprises.”

“Sinopec and Saudi Aramco have enjoyed substantial cooperation in the fields of gas exploration, oil refining, oil trade, and engineering services. The implementation of this project will usher in a new chapter for Sinopec’s investment in refinery and petrochemical projects in Saudi Arabia,” Fu said. “It will also help to extend the strategic cooperation of the two companies in the petroleum and petrochemical value chain, and further strengthen the complementary strategic partnership of the two parties. Sinopec is very pleased to contribute to the already solid economic ties between China and Saudi Arabia, whilst furthering our commitment to social responsibility and the pursuit of green, low-carbon development.”

Sinopec has partnered with Saudi Aramco, along with ExxonMobil, in the Fujian Refining and Petrochemical Company Limited, and Sinopec SenMei (Fujian) Petroleum Company Limited in China’s Fujian Province, as well as with Sino Saudi Gas Limited, an in-Kingdom gas exploration company. Sinopec, the biggest Asian-owned refiner operating in Asia, is also Saudi Aramco’s largest crude oil buyer.”

Read more: Saudi Aramco Press Release

According to the press release, “His Excellency Dr. Mohammed bin Saleh Al-Sada, Minister of Energy and Industry of the State of Qatar, and Peter Voser, Chief Executive Officer of Shell, signed today a Heads of Agreement that sets the scope and commercial principles for the development of a world-scale petrochemicals complex in Ras Laffan Industrial City, Qatar. This agreement follows the conclusion of a joint feasibility study conducted by the partners, Qatar Petroleum and Shell.

The scope under consideration includes a world-scale steam cracker, with feedstock coming from natural gas projects in Qatar; a mono-ethylene glycol plant of up to 1.5 million tonnes per annum using Shell’s proprietary OMEGA (Only MEG Advantaged) technology; 300 kilotonnes per annum of linear alpha olefins using Shell’s proprietary SHOP (Shell Higher Olefin Process); and another olefin derivative. The complex will produce cost-competitive petrochemicals products to be marketed primarily into Asian growth markets. Qatar Petroleum will have an 80% equity interest in the project and Shell 20%.

His Excellency Minister Al-Sada said: “This critical petrochemicals project fits well with Qatar’s strategy to strengthen and further diversify its growing chemicals industry and represents an important milestone on our journey to become a significant global petrochemicals producer. In line with directives of His Highness, the Emir, Sheikh Hamad Bin Khalifa Al Thani, this large petrochemicals complex will provide Qatar with another viable option to extract optimal value from its natural gas resources.”

Peter Voser added: “This agreement marks the beginning of another partnership with Qatar Petroleum for the development of a world-scale petrochemicals project in Qatar. Coming on the heels of the inauguration of Pearl GTL, this new venture demonstrates the commitment of both parties to deepen our relationship even further. Shell values the opportunity to bring to Qatar the expertise and technology necessary to deliver a petrochemicals project of this scale and looks forward to its successful delivery.”

Qatar Petroleum and Shell have delivered Pearl Gas-to-Liquids (GTL) and Qatargas 4 this year; two of the world’s largest projects built in Ras Laffan Industrial City.”

Read more: Shell Press Release

The press release states, “Samsung C&T and the Korea National Oil Corporation (“KNOC”) will jointly acquire US oil and gas company Parallel Petroleum LLC (“Parallel”). Samsung C&T Oil & Gas Parallel Corp., Samsung C&T’s local subsidiary in the US, and KNOC signed a Purchase and Sale Agreement with PLLL Holdings, LLC, which owns Parallel, in Midland, Texas on November 29th, 2011. Upon completion of the transaction, Samsung and KNOC will respectively own 90% and 10% of Parallel.

Parallel currently operates 8 oil and 2 gas producing fields in the states of Texas and New Mexico. Parallel produces approximately 8,400 barrels of oil and gas per day and has approximately 69 million barrels in reserves.

Through the deal, Samsung C&T will secure 50 professionals experienced in developing oil and gas fields. This will give Samsung C&T the ability to enhance its industry capabilities and strengthen its competitiveness.

Along with the investment in the Ankor oil fields in 2008, the acquisition of Parallel marked the significant foundation for the expansion of our natural resources business in the US market.

In 2008, Samsung C&T and KNOC jointly acquired the Ankor assets (daily production of approximately 16,000 barrels and reserves of approximately 71 million barrels) located in the Gulf of Mexico. Ankor currently produces oil from 17 platforms in 5 offshore oil fields, and Samsung C&T produces and explores for oil and gas from 10 other oil and gas fields around the world.”

Read more: Press Release

Switzerland is a major destination for foreign investments and international banking for governments. Regimes that are not in line with the United Nations have grown concerned about the safety of their overseas assets. Venezuela has shifted money and gold overseas back to Caracas. The Libyan Investment Authority and other Libyan state-owned assets were frozen internationally when the Libyan rebellion was well underway.[Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

Nikoloz Gilauri

Georgian Prime Minister Nikoloz Gilauri has proposed legislative amendments to start privatization efforts in several large state-owned enterprises. The amendments include floating minority stakes in the SOEs which could be on the Warsaw and London stock exchanges. The minority stakes could range from 15 to 25% of the SOE. Russia and other Central Asian countries have done similar things in the past year.

Three noteworthy SOEs pointed out were, the Georgian State Electric System, Georgian Oil and Gas Corporation Ltd., and Georgian Railway. Sovereign funds and other long-term investors are constantly on the search to find infrastructure assets backed by governments.

Hatta Rajasa

Indonesian state-owned enterprises (SOEs) play a major part in the Indonesian capital markets. In September 2010, listed SOEs contributed to 29.5% of the total market capitalization on the Indonesian Stock Exchange. Like Malaysia and other Southeast Asian countries, Indonesia wants to increase privatization to drive the development of their capital markets and diversify sectors. Hatta Rajasa, Coordinating Minister for the Economy, recently said the Indonesian Government would halt plans for more state-owned enterprise initial public offerings this year. In addition, the Government of Indonesia is actively trying to limit the number of outstanding state-owned enterprises from 142 to 72 by 2014. Like many Asian centrally planned economies with state-owned enterprises, many are trying to grow profitability and increase operational efficiency.

As of fiscal year 2009, total revenues of Indonesian state-owned enterprises exceeded Rp 986 trillion (US$ 106 billion).  Also as of December 31, 2009, the assets of Indonesia state-owned enterprises reached 40% of GDP.

[Content protected for Sovereign Wealth Fund Institute Standard subscribers only. Please subscribe to view site content.]

NY Times reports, “the Chinese government’s largest investment ever in a Western company, a proposed $19.5 billion stake in the Australian-British mining giant Rio Tinto Group, collapsed early Friday, dealing a blow both to China’s global corporate ambitions and to its efforts to gain clout in the natural resources market.

The board of Rio Tinto announced the decision after meeting in London on Thursday, saying the company had ended the deal it struck in February to sell the stake to China’s state-owned Aluminum Corporation of China, also known as Chinalco.

The board said in a statement early Friday that it had ended the deal with Chinalco and would raise about $20 billion by issuing new stock and forming a joint venture with its longtime rival, the Australian mining giant BHP Billiton, the world’s largest mining company.”

read more: NY Times