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Trading losses at Sinopec said to spur top execs' suspensions
CHINESE refining giant Sinopec has suspended two top officials at its Unipec subsidiary after the energy-trading unit suffered losses, according to people with knowledge of the matter.
Chen Bo, president of Unipec, and Zhan Qi, the company's Communist Party secretary, have been suspended, Sinopec spokesman Lyu Dapeng confirmed in a text message on Thursday, adding that it was due to "work reasons". He declined to confirm whether the move was spurred by trading losses.
Unipec, known officially as China International United Petroleum & Chemical Co, is one of the most influential trading firms in the world, handling crude purchases and fuel sales for Asia's biggest refiner.
The changes at the company reflect a broader trend across the globe, where companies have been wrong-footed by wild swings this year in price spreads between oil grades, particularly in the US market. Several have restructured operations.
Shares in Sinopec, known officially as China Petroleum & Chemical Corp, tumbled as much as 7.1 per cent in Shanghai on Thursday, trading 6.4 per cent lower at 2.44 pm local time.
"The market is closely watching for any details of the loss, including its size and how big an impact it may have on the overall operations of Unipec and Sinopec." Li Li, an analyst with industry consultant ICIS China, said by telephone from Shanghai. "So far, the confirmed information is very limited, but it also seems that the risk is controllable."
Unipec's purchases on behalf of Sinopec were a critical contributor to China becoming the biggest buyer of US crude, before shipments were stopped due to the trade war between the two countries. Mr Chen, who headed the firm's trading business, said in September that the company had put a plan to boost American imports on hold as it assesses the impact of the dispute.
While it stopped buying American supplies for use in Sinopec's refineries, Unipec continued to lift cargoes to resell to other firms in what's known as third-party trading. More recently, an easing of tensions has spurred more shipments. Earlier this year, Unipec was also embroiled in a dispute with Saudi Arabia, saying the producer's prices were costly and cutting purchases just as it was boosting US imports.
Mr Chen and Mr Zhan, who was the highest ranking party official at the company, couldn't be reached at the firm's Beijing office on Thursday.
Ling Yiqun, a vice president at Sinopec, will take over their duties, the people with knowledge of the reshuffle said. Chen Gang, a vice president at Unipec, will take over administrative responsibilities, according to Sinopec spokesman Mr Lyu. BLOOMBERG