China CEFC Energy is understood to have approached oil trading house China Arts Huahai Import & Export with an acquisition offer after the latter started liquidating its assets.
Industry officials have said a successful acquisition would allow CEFC to begin crude and oil product imports and exports.
Sources have added that the Fujian-based investment company Haisi Group is also interested in China Arts Huahai. Haisi wants to enter the oil trading sector to capitalise on China’s One Belt, One Route (OBOR) strategies.
CEFC wants access to the international oil market and has been buying related assets – such as oil storage facilities, establishing joint ventures to build oil terminals and trying to secure import and export licences from the government.
Earlier this year, the company teamed up with China’s largest independent refiner Shandong Dongming Petrochemical to construct a crude oil terminal in Rizhao City, Shandong Province. The joint venture, in which Rizhao Port Authorities owns 51%, CEFC has 25% and Dongming Petrochemical owns 24%, will operate a 300,000 dwt crude terminal, two 150,000 dwt crude berths and a 9.8 million barrel storage farm.
In China, international oil trading is under strict government control. The oil import and export business falls under a licence system. In April, the National Development and Reform Commission (NDRC) decided to suspend new crude import applications from oil refiners from May 5 given concerns over a supply glut.
Zhuhai City-based China Arts Huahai launched its liquidation process in response to cash flow constraints and mounting debts.
The central government granted the company a crude import licence in 2003 and four years later it won the right to buy in oil products. China Arts Huahai, which is owned by China National Arts & Crafts, was set up in 1995. It has two oil tank farms located in Nantong City, Jiangsu Province, and in Laizhou City, Shandong Province.