Interview Of the Week - Issue 32

32 - August 7th thru August 13th 2000, Vol X

Sinopec Boosts its Activities in Yemen

China Petrochemical Corporation (SINOPEC) is a giant petroleum and petrochemical enterprise group with the status of legal person, established in July 1998 by the State on the basis of the former China Petrochemical Corporation. It is a State-owned corporation set up by the State's exclusive investment, an investment organization authorized by the State and a State holding corporation determined by the State Council. It practices the president responsibility system and its president is the legal representative. Its registered capital is RMB 104.9 billion and its headquarters is in Beijing. SINOPEC's wholly-owned enterprises, holding enterprises, participation enterprises and subordinate units including petroleum enterprises, oil refining and petrochemical enterprises, petroleum companies of provinces, autonomous regions, cities and cities with independent plans, units of scientific research, exploration, design, construction and information, etc.., and professional companies of sales, foreign trade, materials supply, engineering and others. SINOPEC exercises the rights of promoters over the related state-owned assets in wholly-owned enterprises, holding enterprises and participation enterprises, including receiving benefits from assets, making major decisions and selecting managers, etc. It conducts operation, management and supervision over state-owned assets according to laws and shoulders respective responsibilities of preserving and increasing the value. In 1999, according to the PRC's Law of Corporation and the principle of "Separating core business from sideline business, separating performing assets from non-performing assets and separating business functions from social functions", SINOPEC carried out restructuring and system reform in its member enterprises in respect of business, assets, debts and creditor's rights, organization, personnel and others, setting up modern enterprise systems progressively.
Under the State macro adjustment, control, supervision and management, SINOPEC carries out various activities of operation independently in conformity with legal provisions. It exercises the integration of upstream with downstream, domestic trade with foreign trade, and production with sales, enjoying full rights of independents operation. It mainly manages all the state-owned assets or state-owned stock rights formed by State investment in the Corporation and its wholly-owned enterprises, holding enterprises and participation enterprises. It mainly engages in oil and natural gas exploration and development, oil refining and comprehensive utilization for petrochemical production, chemical production by using oil products (including associated gas and LPG) as raw materials, production and sales of synthetic fibers and synthetic fiber monomers, product import and export business, foreign bidding and purchasing, leasing, project contracting, labor exporting and others. Approved by the State, it engages in domestic and overseas oil and natural gas resources exploration and development, sino-foreign joint venture and cooperation of petrochemicals, and investment and financing activities at home and abroad. It also engages in exploration design engineering construction and diversified operation and services. etc.
Last Tuesdays, Mr. Mou Shuling, Vice President of Sinopec left Yemen after a short visit to Yemen at the invitation of Yemeni Oil & Gas Corporation and the Ministry of Oil and Mineral Resources. During the visit he met with a number of high ranking Yemeni officials and discussed with them ways of boosting bilateral cooperation between Yemen and China.
Mr. Mou has been working in the field of exploration of petrochemical production and management for more than thirty years. Through his work experience he established bilateral relations with oil companies worldwide. His visit to Yemen was part of a plan to promote existing business relations between China and Yemen and execute the bilateral agreements regarding investments. Mohammed Ben Sallam and Hisham Al-Qubati of the Yemen Times met with him to come close of the company future plans in Yemen.

Excerpts:

Q: When did your business relations with Yemen commence?
A: The business relation between Sinopec and Yemen's oil companies started ten years ago. We have very extensive operations in refining and petrochemical operations. We have imported every year considerable amount of crud oil from Yemen. The business between Yemen and Sinopec stands at present indirectly through Sinocom, which is another trading company in China. It imports, on behalf of the sinopec about 1 million tons of crude oil every year to China.
ZPEB Drilling Rig 905 from SINOPEC entered into Yemen through international competitive bidding last April. The first well drilled at Block 53 for Dove Energy was an immediate success testing about 5,000 barrels of crude oil per day.
I wish what we are doing here can contribute to the development of the economy of Yemen. I was very impressed by the fast development of the oil and petroleum industry in Yemen. We were very glad to see that the Yemeni government has implemented a series of policies in boosting domestic economy and industry. We are fully aware that the oil and petroleum industry in Yemen is now playing more and more important and significant role in Yemen's national economy. Sinopec is the largest, and No. 1 oil company in China. We think that our role in the Chinese economy is becoming more and more significant as well. In last year fortune of 500 world petroleum companies ranking orders, Sinopec was ranked 58th in terms of annual revenues.
We believe that the experience we have practiced in china can, in certain ways, be helpful to our counterparts in Yemen. So in that way we will communicate not only in the market trading relations but also in industrial corporations and collaborations between the two countries.
Today we have had very friendly talks with HE. The Minister of Oil and Mineral Resources of Yemen and have signed an agreement with Yemen Oil & Gas Corporation this morning.

Q: Are you planning to invest in other fields?
A: We have discussed this with several local companies here and the Yemen Oil and Gas Corporation officials. I think we have touched on other areas of potential collaboration and cooperation. The core business of Sinopec is in the areas of refining and petrochemicals. Presently, a team of specialists from Sinopec is discussing the various areas of potential cooperation with our counterparts in Yemen. I believe that the relations between Sinopec and Yemen will be furthered in the future. We would like to carry out comprehensive cooperation with Yemen petroleum Industry. There have been a high profile exchange of visits from both governments. For example in 1998 HE. President Saleh paid a visit to China and in 1999 the Vice President visited China. High ranking Chinese officials also paid a visit to Yemen in 1996. We can feel that our historic relations are very smooth and warm. We feel the hospitality of our local hosts. I wish that our activities here will promote the existing bilateral relations.

Q: Do you think that your company and its staff are safe here?
A: I would like to thank the government and all the relevant departments for the concerns and cares they pay to the security issues of the staff here. We have asked our local staff here to abide by local laws and regulations and to take more and more care of the local customs here. Also, our Embassy here as well as the diplomatic staff have given us more guidance. We know that there are other issues regarding security here in Yemen, and I wish that the government and the local government can give us more assistance in the future.
We have been told by Yemeni officials that Yemen's policy towards oil investment is very open. We feel that it is very positive in this way. The other aspects of the policy have been very stable, and the general domestic environment of Yemen seems to be stable as well. Actually the government here has made a lot of efforts to stabilize the currency and to speed up the economic growth. We have also talked with officials here about the aspects of the areas of registration of foreign companies here. It seems that you have also a very encouraging policy for foreign companies to invest here. For our specific activities of execution of the projects, I think that the government of Yemen has demonstrated a lot of efforts in implementing a very flexible environment for the company. One of the units of Sinopec has engaged in the local business here already and we are expecting more and more activities of Sinopec in Yemen. We are confident that in the future we can have regular relations with the government and we can have a kind of assistance from the government. Although the present activity level of Sinopec is not very high, I think that the very good relations between the two countries can be a very good foundation for further activities in the future.

Q: How many employees do you have in Yemen?
A: Including all our operations in Yemen we have about 50. This number will increase in the future with the expansion of our activities here.

Q: Does your company operate in other countries?
A: Yes it does. We have a very extensive international presence in Africa, Mideast, Midasia, central Asia and Russia. Some projects are implemented independently by us and some others are done through joint efforts with local companies and local governments.
Part of our visit to Yemen has been to find local partners and local companies with which we can cooperate and also contribute to the local economy.