Sinopec Unipec General Manager Chen Bo and Party Secretary Zhan Qi are said to have been suspended for speculating in futures oil, which caused the company to suffer heavy losses.
(Sing Tao Daily reported) Sinopec (386) Unipec General Manager Chen Bo and Party Secretary Zhan Qi were reportedly suspended due to speculation in oil futures that caused the company to suffer heavy losses.Industry insiders predict that the amount of oil futures speculation will be in the hundreds of millions of dollars at any time, which may exceed the scale of AVIC Oil’s loss of US$550 million in 2004. There are also mainland media reports that the amount of oil speculation has lost more than 10 billion Hong Kong dollars, but the relevant news is just a rumor, the company did not make further disclosures.Affected by the news, Sinopec's share price fell more than 4% yesterday.
Sinopec confirmed yesterday that the two were suspended due to "work reasons" and the company was operating as usual, but did not give further reasons.Reuters quoted sources as saying that the suspension of the two is related to the possible losses of the company due to some people's misreading of the market in the second half of this year.Bloomberg reported that Sinopec's party committee announced the suspension at an internal meeting on Wednesday, and the deputy general manager Ling Yiqun took over the duties of the two; Sinopec also said that Chen Gang, another deputy general manager, will manage administrative work.
Chen Bo joined Unipec in 1993 and has deep experience in the industry.He predicted at a meeting in September that due to the uncooled Sino-US trade war and US sanctions on Iran, the oil price would be between US$60 and US$80 per barrel under the prevailing global supply and demand conditions.However, Brent crude oil futures has continued to fall since reaching a high of US$87.3 per barrel in early October. It was as low as US$49.96 the day before yesterday, a drop of more than 40%.
It is reported on the Internet that Chen Bo bought 30 million to 70 million barrels of oil futures above 70 US dollars. Assuming the average price of 70 US dollars, the maximum speculative loss is about 1.4 billion US dollars, equivalent to about 11 billion Hong Kong dollars.
Some people in the industry estimate that if the transaction is wrong, the loss may exceed the scale of China Aviation Oil's loss.
Unipec is a wholly-owned subsidiary of Sinopec. Its business is trading of crude oil and petrochemical products, including trading and hedging for the price difference of different oil contracts.According to its annual report, the net profit at the end of last year was 3.85 billion yuan, a year-on-year decrease of 37.6%, with total assets of 173 billion yuan and net assets of 32 billion yuan.
In 2004, Chen Jiulin, the then president of China Aviation Oil Singapore, was suspended for speculating in futures oil, resulting in a loss of US$550 million and almost bankrupting the company.He was also imprisoned for 4 years and 3 months in Singapore for committing fraud and forging documents, becoming the first senior executive of a Chinese state-owned enterprise to be sentenced for violating foreign laws.
After the news of Chen Bo and Zhan Qi's suspension came out, Sinopec's stock price rose by 4.68% to close at 5.7 yuan, and the turnover increased to 1.2 billion yuan.
