Subject: Re: WSJ/Sinopec/SOE
From: "James Bulger" <[email-masked]>
To: "Hunter Biden" <[email-masked]>
Cc: "Devon Archer" <[email-masked]>, "Michael Leonard" <[email-masked]>
Date: Tue, 17 Feb 2015 21:01:18 -0500

It is absurd but let's just wait a few days Xin might get back to us
Patience Kingpin
Us going apeshit won't help the outcome one way or another. Frustrated as
hell here but we are dealing with the Chinese they might be buying time
to get Sinopec done without telling us something that has anyone at BHR
loosing "face"
We should sit still for two days then follow up with another email inquiry
Let's circle up in Thursday morning
Ok?

On Tuesday, February 17, 2015, Hunter Biden <[email-masked]>
wrote:

> That's absurd. No one can even reply to an email w/ a simple yes or no for
> two weeks?
>
> RHB
> 202.333.1880
>
> On Feb 17, 2015, at 8:17 PM, James Bulger <[email-masked]
> <javascript:_e(%7B%7D,'cvml',[email-masked]');>> wrote:
>
> No idea what is going on this deal. The Holiday break in China is now in
> full swing so we may not hear anything for the next two weeks.
> Jimmy
>
> On Tuesday, February 17, 2015, Hunter Biden <[email-masked]
> <javascript:_e(%7B%7D,'cvml',[email-masked]');>> wrote:
>
>> And still no word on whether they called and we delivered the $??? What's
>> the deal?
>>
>> RHB
>> 202.333.1880
>>
>> On Feb 17, 2015, at 4:45 PM, James Bulger <[email-masked]> wrote:
>>
>> Take a look at this article
>>
>>
>> ---------- Forwarded message ----------
>> From: *Eileen Kerwin* <[email-masked]>
>> Date: Tuesday, February 17, 2015
>> Subject: WSJ/Sinopec/SOE
>> To: James <[email-masked]>, James Bulger <[email-masked]>
>>
>>
>>
>>
>> BUSINESS
>> <http://www.wsj.com/public/search?article-doc-type=%7BBusiness%7D&HEADER_TEXT=business&mod=flashline>
>> China Considering Mergers Among Its Big State Oil CompaniesGovernment
>> economic advisers are conducting a feasibility study of options for
>> consolidation
>> [image: Drivers wait to fill their tanks at a Sinopec gas station in
>> Zhengzhou, Henan province, Feb. 9, before China was set to raise retail
>> prices after global oil prices recovered some 20 percent in the past two
>> weeks.]ENLARGE
>> Drivers wait to fill their tanks at a Sinopec gas station in Zhengzhou,
>> Henan province, Feb. 9, before China was set to raise retail prices after
>> global oil prices recovered some 20 percent in the past two weeks.
>> PHOTO: REUTERS
>> By
>> LINGLING WEI And
>>
>> BRIAN SPEGELE
>> Feb. 17, 2015 7:30 a.m. ET
>> 2 COMMENTS
>> <http://www.wsj.com/articles/china-considering-mergers-among-its-big-state-oil-companies-1424176242#livefyre-comment>
>>
>> BEIJING—China is considering forging megamergers among its big state oil
>> companies, seeking to create new national champions able to take on the
>> likes of Exxon Mobil  <http://quotes.wsj.com/XOM>Corp. and produce
>> greater efficiencies at a time of low prices.
>>
>> At the request of China’s leadership, government economic advisers are
>> conducting a feasibility study of options for consolidation, according to
>> officials with knowledge of the research. One involves potentially
>> combining the country’s largest oil companies, China National Petroleum
>> Corp., or CNPC, and its main domestic rival, China Petrochemical Corp., or
>> Sinopec, the officials said. Other options look at merging two other major
>> energy companies, China National Offshore Oil Corp., or Cnooc, and Sinochem
>> Group.
>>
>> No timetable has been set for a decision on whether or when to proceed
>> with the various proposed mergers, said the officials. Spokespeople for the
>> four Chinese oil companies and the State-owned Assets Supervision and
>> Administration Commission, which oversees the largest state enterprises,
>> declined to comment or didn’t respond to queries.
>> Advertisement
>>
>> The possible mergers would be the latest consolidation of state companies
>> blessed by the government as it tries to regear a slowing economy for a new
>> phase of growth. As part of that effort, President Xi Jinping
>> <http://topics.wsj.com/person/J/Xi-Jinping/6475>, now more than two
>> years in office, is trying to revamp major state firms to make them more
>> competitive globally.
>>
>> Though the government has taken some tentative steps to allow more
>> private and foreign capital to flow into infrastructure, resources, banking
>> and other areas long the preserve of state firms, Mr. Xi has said state
>> companies remain an “important pillar of the national economy.” The
>> government “must ensure they thrive,” Mr. Xi said in remarks in August.
>> Bigger and stronger state companies, according to officials and scholars
>> familiar with the leadership’s thinking, are viewed by Mr. Xi as key to
>> China’s reclaiming its prominence in the world.
>> Advertisement
>>
>> Mergers could also boost efficiencies in an economy increasingly burdened
>> by excess capacity—a problem that has caused Chinese manufacturers to
>> compete against one other by cutting prices. Late last year, the government
>> announced a plan to merge the country’s top two state-owned railcar makers
>> with a goal of making the combined company capable of competing with
>> Siemens  <http://quotes.wsj.com/XE/XETR/SIE>AG in Germany and Canada’s
>> Bombardier  <http://quotes.wsj.com/CA/XTSE/BBD.B>Inc.
>>
>> The four oil companies—CNPC, Sinopec, Cnooc and Sinochem—have long
>> dominated every phase of the industry; for years each had a geographic or
>> business area of specialty. For instance, CNPC focused on exploration and
>> production, and Sinopec on refining. Over the past 15 years, in response to
>> earlier reform plans to spur competition, they’ have expanded into the
>> others’ turf, creating overlapping operations that span exploration,
>> refining to running gas pumps.
>> RELATED
>>
>>
>>    - Oil Prices Edge Higher
>>    <http://www.wsj.com/articles/oil-futures-trade-near-friday-close-1424068921>
>>    - Europe’s Oil Companies Get a Boost From Their Refineries
>>    <http://www.wsj.com/articles/europes-oil-companies-get-a-boost-from-their-refineries-1424104067>
>>    - Pemex Delays Refinery Upgrades Due to Budget Cuts
>>    <http://www.wsj.com/articles/pemex-delays-refinery-upgrades-due-to-budget-cuts-1424131058>
>>
>> “They’re increasingly fighting among each other,” said one of the
>> officials with knowledge of the consolidation plan. “That has led to lots
>> of waste and inefficiency.”
>>
>> With international oil prices having halved in less than a year, those
>> problems have become more pronounced, giving reform new urgency. Combining
>> and then streamlining the operations of the major Chinese oil producers
>> could help reduce waste caused by redundant staff and projects, the
>> officials said. A combined enterprise could then focus on building up a
>> better-funded company to compete around the world.
>>
>> Low oil prices have spurred talk of new deals activity across the globe,
>> as stronger companies engage in opportunistic buying of weaker firms. Among
>> big deals last year, Spain’s Repsol  <http://quotes.wsj.com/ES/XMCE/REP>SA
>> agreed to acquire Canadian oil-and-gas producer Talisman Energy
>> <http://quotes.wsj.com/CA/XTSE/TLM>Inc. for $8.3 billion.
>>
>> “We want to create a big Chinese brand to better compete overseas,” the
>> Chinese official said. “We want our own Exxon Mobil.”
>>
>> The potential shake-up would cap what has been a tumultuous period for
>> China’s oil industry. Chinese oil giants—in particular CNPC—have been the
>> focus of an antigraft campaign championed by President Xi. Leading industry
>> executives have been detained for suspected graft, and added scrutiny has
>> helped spur a huge pullback in new investment by wary executives.
>>
>> A decision to consolidate China’s oil sector by making big state firms
>> even bigger could end up tamping competition at home and stymie
>> market-oriented reforms, some analysts said. It is unclear whether a
>> possible consolidation would be followed by reforms, such as lowering
>> barriers that have marginalized independent oil-and-gas producers.
>>
>> “If you are focused on the foreign market, you certainly want to
>> consolidate because it’s more competitive abroad,” said Lin Boqiang,
>> director of the China Center for Energy Economics Research at Xiamen
>> University. “But if just for the domestic market it’s better to have more
>> competition, because competition leads to efficiency.”
>>
>> Beijing has started inviting private capital into the oil industry.
>> Sinopec last year sold a nearly 30% stake in its retail sales-and-marketing
>> unit to a group of 25 investors, mostly Chinese. But none of the
>> initiatives involves selling a controlling stake to the private sector.
>>
>> A bigger challenge is whether the government would allow the combined
>> entities to improve performance by reducing their huge workforces or
>> shedding assets, said Philip Andrews-Speed, an expert on energy governance
>> in China at the National University of Singapore. “That will be the test of
>> whether this is old state-ism ... or are they really looking for better
>> performance,” he said.
>>
>> PetroChina  <http://quotes.wsj.com/CN/XSHG/601857>Co. , the listed arm
>> of CNPC, has nearly 550,000 employees world-wide, more than seven times as
>> big as Exxon Mobil Corp. The Chinese company delivered revenue of $361
>> billion in 2013, compared with more than $420 billion in sales and other
>> revenue at Exxon.
>>
>> These days, all of China’s big oil companies have been under pressure
>> from prices and from the government to cut costs and focus on improving
>> returns. For example, Cnooc  <http://quotes.wsj.com/HK/XHKG/0883>Ltd. ,
>> the listed unit of China National Offshore Oil, says it will cut capital
>> spending by as much as 35% in 2015 as a result of falling global oil
>> prices. Expenditures at PetroChina and Sinopec are also expected to fall
>> this year.
>>
>> Marrying CNPC and Sinopec would create one of the world’s biggest
>> companies. A combined entity at least in the short run could control a vast
>> majority of China’s onshore oil-and-gas production and would hold total
>> assets of hundreds of billions of dollars.
>>
>> In the case of Cnooc, a merger with Sinochem, would give it more refining
>> operations, giving it more sources of revenue that over time could help
>> shield it against oil-market volatility. Cnooc is regarded by analysts as
>> the most vulnerable to the oil-and-gas price drop, in part because it
>> expanded aggressively abroad, buying assets including Canadian oil-sands
>> operator Nexen Inc. for $15.1 billion in 2013 when prices were high.
>>
>> Write to Lingling Wei at [email-masked] and Brian Spegele at
>> [email-masked]
>>
>>
>>
>>
>>
>>
>> --
>> James J. Bulger
>> Chairman
>> Thornton Group LLC
>> 14 Beacon Street, Suite 804A
>> Boston, MA 02108
>> Office tel: 617.248.9440
>>
>>
>
> --
> James J. Bulger
> Chairman
> Thornton Group LLC
> 14 Beacon Street, Suite 804A
> Boston, MA 02108
> Office tel: 617.248.9440
>
>

-- 
James J. Bulger
Chairman
Thornton Group LLC
14 Beacon Street, Suite 804A
Boston, MA 02108
Office tel: 617.248.944