May 15, 2020 / 10:45 AM / 11 days ago

China's Sinopec appoints new oil trading chief amid 2018 loss probe -sources

SINGAPORE, May 15 (Reuters) - China’s Sinopec Corp has appointed Chen Gang, acting president of its trading arm Unipec as the new managing director of the unit, three people with knowledge of the matter said.

He replaces former president Chen Bo, who was suspended in 2018 after Unipec incurred record derivatives trading losses that are the subject of an investigation.

Under the role of managing director, Chen Gang will be head of the trading arm, formally known as China International United Petroleum & Chemical Co and which turns over the equivalent of about 8 million barrels of oil per day - on a par with the likes of top independent energy trader Vitol.

Chen Gang has also been appointed as Unipec’s Communist Party secretary, the sources said. The management changes were announced internally in March, but haven’t been previously reported, they said.

Chen Gang was made acting president in late 2018. Unipec recorded 3.13 billion yuan ($441 million) of profit in 2019, according to Sinopec’s annual report. It reported 4 billion yuan in losses in 2018 after the trading losses.

Sinopec, Asia’s top refiner and largest crude oil buyer, has now officially discharged Chen Bo, but he remains a Sinopec employee, one of the sources said. Chen Bo did not respond to calls and messages seeking comment.

Unipec’s former Communist Party secretary Zhan Qi, who was also suspended alongside Chen Bo in 2018, has also been officially discharged, the source said.

A Sinopec spokesman described the appointment of Chen Gang as a normal personnel change. He did not comment on Chen Bo or Zhan Qi.

China’s State-owned Asset Supervision and Administration Commission (SASAC) is due to wrap up an investigation into the 2018 trading losses, one of China’s largest derivatives debacles in nearly a decade.

The investigation will reach a conclusion next month, said one source.

SASAC did not respond to a request for comment.

The sources requested anonymity because they are not authorised to speak to the media.

“Unipec has over the past year beefed up its back-office functions,” said the source. “The company also enhanced its internal reporting system to avoid big mishaps in the future.”

Sinopec has said little about Unipec’s trading losses beyond blaming them in January 2019 on “inappropriate trading strategies” in crude oil hedging.

The refiner, however, dropped a five-year crude oil purchasing strategy in early 2019 that the management believed was partially to blame for speculative derivatives activity, Reuters has previously reported.

Sinopec also appointed Peng Zhiming, formerly with Sinopec Hong Kong, as the new chief financial officer for Unipec, replacing Tian Xiaoyan, a company veteran, sources said. ($1=7.0963 yuan) (Reporting by Chen Aizhu; Editing by Florence Tan and Neil Fullick)

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