A bit more than a year ago, Sinopec bought Addax Petroleum. Addax has been a steadily active operator in Gabon. Only recently has Sinopec hoisted their sign on top of the Addax sign at the local office in Port Gentil and apparently brought in some Chinese management observers. Good luck with that 30% cost reduction.
Sinopec, aside from being an oil and gas operator, also has its own service company branches. This is not common amongst major oil and gas operators these days, though it was more common a long time ago all over and more recently, it was, and is still somewhat, common amongst Eastern European operators as a holdover of of the Soviet era. Back when everything was state-run in that part of the world, service functions were provided in-house. Sinopec, like the other major Chinese companies, is state-backed and those in-house service companies are probably very useful for operating in China. Those same service branches are harder to employ in a country like Gabon where government rules related to tendering requirements make it harder to self-employ them. Additionally, other oil and gas operators would be very reluctant to use the service-arm of a fellow operator that would probably share information with the parent company.
We had a meeting today about Sinopec and their plans. The specifics of the meeting are not very important, and of course I would never discuss them here anyway, but we ended up rambling a bit and got to talking about Sinopec's strategy and what the significance the trade deals China has with Gabon might mean in terms of special access for Sinopec and exemption from the normal rules. Just speculation. Anyway, I was spending the meeting thinking about how the objectives Sinopec has are fundamentally different than that of a normal operator. They are not there to make money first. They are here to secure resources for China. That difference is critically important to understanding the decisions Sinopec is likely to make here.