Merger of China’s Iranian oil trader Zhuhai Zhenrong Corp and Macau-based conglomerate Nam Kwong Group has been approved by the country’s cabinet, as part of a plan to consolidate state-owned enterprises to boost competitiveness.
The merger could boost the financial standing of Zhuhai Zhenrong, a former defense-sector affiliate that was created in the mid-1990s to deal in Iranian oil, oil industry officials said, Reuters reported on Tuesday.
A Zhuhai Zhenrong spokeswoman said details of the restructuring and a date for completion had not been finalized.
"The merger may at least help win Zhenrong larger bank financing for oil trading," said one senior trader familiar with Zhenrong.
State-controlled Nam Kwong Group is involved in real estate, logistics and travel as well as small-scale natural gas and petrochemicals businesses, according to the company website.
Zhuhai Zhenrong imports about 240,000 barrels per day of Iranian crude oil, equal to about 4 percent of China's total crude oil imports, under annual supply contracts with Tehran.
It mainly supplies the fuel to China's Sinopec Corp, Asia's largest refiner. Guangdong Zhenrong is 44.3 percent owned by Zhuhai Zhenrong, according to company officials.