CNPC buys Canadian firm
China National Petroleum Corporation (CNPC) has purchased Canada-based oil firm VNX for Can$499 million (US$386.6 million), or Can$10 per share. The deal was signed between CNPC’s subsidiary CNPC International and the Canadian firm on 26 February. Most of VNX’s oil assets are located in Libya, so CNPC must obtain the approval of Libyan National Oil Corporation before the deal can be finalised. The acquisition will expand CNPC’s presence in Libya where the company has already exploited oil reserves and constructed pipelines.
Total assets of VNX are valued at Can$215 million, with stock prices rising by 22.4 per cent after the agreement was signed.
CNPC’s move is the latest deal in a string of Chinese overseas purchases. Earlier this year Chinalco proposed a US$19.5 billion investment in Anglo-Australian miner Rio Tinto, currently under review by Australia’s Foreign Investment Review Board.
Giant refineries to increase competition
CNPC is also expanding its domestic capacity: it will build a refinery capable of processing over 10 million tonnes of crude oil in Jieyang in the southern province of Guangdong. China Business News reports that the refinery has been approved by the National Development and Reform Commission (NDRC). The plant could refine heavy oil from Venezuela and will increase CNPC’s competitive edge against Sinopec and China National Offshore Oil Corporation, both already operating 10 million tonne refineries in Guangdong and working to double their capacities.
CNPC also signed a deal with Qinzhou city in the neighbouring Guangxi Autonomous Region to build another 10 million tonne refinery to process oil imported from Sudan. With an investment of 15.3 billion yuan, the project is an extension of another 10 million tonne refinery currently under construction. The project is waiting for NDRC’s green light.
Food safety law passed
Following a series of food safety scares, the Standing Committee of the National People’s Congress, China’s legislature, passed the revised Food Safety Law on 28 February. The new law, which takes effect on 1 June, has been debated for three years. It will impose stricter regulations on food hygiene, with fines for offenders increasing from five times the value of products sold to ten times. The new law also changed rules on food additives, allowing them only when they are proved beneficial to consumers. Previously, only harmful additives had been forbidden.
According to the new law, a national food safety committee will be established at the State Council, China’s cabinet, to coordinate different administrative organisations involved in food safety regulation. Currently, brand registration, safety permits, and market monitoring are scattered across the different administrative bodies.