Shares Fall as Sinopec Suspends Two Top Oil Traders
The two executives suspended include Unipec’s president, Chen Bo, and the senior Communist Party representative at the company, Zhan Qi.
China Petroleum & Chemical Corp. (NYSE: SNO), the giant state-owned oil and gas company, has suspended two of its senior executives for reasons related to losses in crude oil trading.
The company, known as Sinopec, said it was investigating the transactions at its commodities trading subsidiary, Unipec.
"The Company was informed that Unipec incurred some losses during certain crude oil transactions due to the oil price drop. The Company is currently in the process of evaluating the details of such circumstance," Sinopec said.
Shares in the company were hit hard by the news. Sinopec closed today at $69.75 per share, down more than 4 percent in New York. On Thursday, after investors first learned of the news, the company's stock was off as much as 7 percent during the day.
The two executives suspended include Unipec's president, Chen Bo, and the senior Communist Party representative at the company, Zhan Qi, according to a Sinopec filing.
"The government inspectors were looking into the company's operations for the past few years ... one of the problems they found was the severe trading losses in the second half of this year because of wrong market judgment," an unnamed source told Reuters.
The sources did not refer to any wrongdoing on the part of the two men.
Oil traders said Chen's removal could create uncertainty at Unipec.
"He's been a key man in the oil trading industry in the past decade," said a veteran oil trader in Asia.
Sinopec's stock had already been performing badly late this year given the drop in oil prices. This additional news caused "a selloff and decline in prices," one analyst said.
In October, Sinopec reported that third-quarter net profit fell from the previous quarter, after rising for five consecutive quarters.
For the first nine months of 2018, the company reported a loss of 5.47 billion yuan ($794 million) from foreign exchange rate changes and holdings in derivative financial instruments, according to financial reports issued in October.
(Reuters contributed to this article.)