Chinese state energy company Sinopec, Asia's largest refinery, is in early-stage talks with Hin Leong Trading Pte Ltd to buy a stake in an oil storage terminal that is partly owned by the Singapore trader, according to Reuters.
The size of the stake, as well as the potential price, are not yet known. The sale could provide a cash injection for Hin Leong Trading, one of Asia’s biggest independent oil traders, which has been struggling under the weight of its US$385 billion debt to 23 banks.
HLT is the parent company of Ocean Bunkering Services (OBS), a prominent bunker supplier in Singapore. The financial implosion of HLT comes at a time when tankers, especially Very Large Crude Carriers (VLCCs) are enjoying very firm earnings for trading and storage.
The impact of the potential new deal between Sinopec and HLT is crucial for the bunker industry and especially for ship bunkers in Singapore. With questions over whether HLT's bunkering arm can survive in its present form.
Sinopec, which owns several storage facilities outside China - in Rotterdam, Antwerp and Fujairah - has long been looking for more storage sites to boost its global trading profile, according to the company.
Of Hin Leong Group’s assets, which also include about 130 oil tankers, the stake in the Universal Terminal is the most attractive to potential investors, said Reuters report.
“Sinopec is aware of the good asset quality of Universal Terminal, but the question is at what price and if the terminal can come clean of creditors’ debt claims,” stated Sinopec's official.