| SINGAPORE/HONG KONG
SINGAPORE/HONG KONG Feb 13 China's state-owned
Sinochem is in early talks with Noble Group to buy an
equity stake in the embattled trader, three sources familiar
with the matter said, in a move that would help it gain access
to the commodity trader's global supply chain.
Taking a stake in an internationally active trading house
like Noble would help Sinochem, a big oil, gas and petrochemical
company, in its ambitions to become a more globally active
energy trader, and also develop China's gas industry.
The discussions are taking place as Noble looks to rejig its
business units, cut debt and boost liquidity to fight a
long-term downtrend in commodity prices.
In November, Hong Kong-headquartered Noble said it had met
its capital raising target of $2 billion as it sold assets,
completed a rights issue and restructured its operations.
The sources said the talks have not been completed and there
is no assurance that a deal will be finalised.
They said senior Noble executives visited China in recent
months to hold talks with Sinochem's management, and both sides
also met at Noble's U.S. regional hub in Stamford, Connecticut.
The sources declined to be identified as they were not
authorised to speak to the media.
Sinochem did not immediately return a request for comment,
and an external spokeswoman for Noble declined comment.
Noble already has the backing of Chinese sovereign wealth
fund China Investment Corp. (CIC), which participated in the
company's rights issue last year. The capital raising followed a
slump in investor confidence as Noble's accounting practices
were questioned by Iceberg Research.
CIC has a 9.6 percent stake in Noble, while Noble Chairman
Richard Elman holds a stake of about 18 percent.
The size of the planned stake or the amount to be invested
by Sinochem has not yet been finalised, and any deal could face
scrutiny in China as authorities there try to control capital
outflows, sources said.
The appeal of Noble for Sinochem is likely to be access to
its global supply chain.
A Sinochem source said the company was still conducting due
diligence on Noble, which typically takes six months to a year.
He said the company was looking at Noble's North America energy
trading, which could complement Sinochem's existing portfolio.
Noble specialises in shipping and storage logistics, rather
than owning large production assets or refineries, and is also a
major player in gasoline blending in the United States.
Noble is also targeting Asia's emerging liquefied natural
gas (LNG) market as a core growth area, while Sinochem is likely
to play a key role in China's plans to expand its natural gas
sector to reduce the share of polluting coal in its energy mix.
Access to Noble's LNG trading network could help with the
(Reporting by Anshuman Daga in SINGAPORE and Sumeet Chatterjee
in HONG KONG; Additional reporting by Henning Gloystein and
Florence Tan in SINGAPORE and Hallie Gu in BEIJING; Editing by