Sinopec Corp. forms a joint venture with its parent company China Petrochemical Corp. to gain access to its $3 billion oil and gas assets. The assets acquired under the terms of the deal are located in Colombia, Kazakhstan and Russia.

China's largest oil refining company Sinopec Corp. agreed to form a joint venture with its parent company China Petrochemical Corp. The joint venture, called Sinopec International Petroleum E&P Hongkong Overseas Ltd, will acquire oil and gas assets worth $3 billion in countries around the world, including Russia, Kazakhstan and Colombia.

China Petrochemical currently owns 73.86% of Sinopec shares. Since 2010, the volume of investments in the subsidiary for various oil and gas transactions has amounted to $34 billion.

The purpose of the joint venture is to divest Sinopec Corp. to the international level and increase its income. According to last year's results, the company's net profit fell by almost 13%.

“The transaction will facilitate the achievement of Sinopec Corp.'s strategic objective. to become an international player in the market with significant oil and gas assets,” the company said in an official statement.

The created joint venture plans to acquire Petrochemical Corp.'s subsidiary. Tiptop company 50% of the share capital of Caspian Investment Resources (CIR), which is mainly engaged in the development of oil and gas fields in Kazakhstan. The expected transaction amount is $1.57 billion.

Another target of Sinopec International will be the Colombian Mansarovar Energy Colombia. The company plans to buy 50% of the total share capital for $776 million from Sinopec Overseas Oil & Gas, which is wholly owned by China Petrochemical.

Finally, the joint venture agreed to acquire a 49% stake in Taihu from Sinopec Overseas. Taihu owns 97.14% of the shares of the Russian Udmurtneft, which is engaged in geological exploration, development and operation of hydrocarbon fields and is developing 24 oil fields. The transaction value will be $652.77 million.

Kirill Sarkhanyants

Sinopec will buy assets in Russia