China Oilfield Services Ltd (COSL) will buy Norway's Awilco Offshore ASA for about $2.5 billion to expand capacity and widen its footprint overseas.

Beijing-based COSL, a unit of China National Offshore Oil Corp, said last week it will pay 12.7 billion kroner ($2.49 billion), or 85 kroner a share for Oslo-listed Awilco.

COSL's CFO Zhong Hua said COSL "will continue to pursue acquisition targets" as part of its goal to become a competitive international oilfield services company by 2010.

The purchase will increase COSL's drilling-rig fleet in Asia and Europe to 22 from 15 as well as add management expertise and technology to the Chinese company.

The Awilco deal would mark the first overseas acquisition for COSL which failed to buy Russia's STU, a unit of TNK-BP, at the final stage in a deal worth just over $10 million earlier this year.

SDIC plans oil reserve project

SDIC Communications Co, a subsidiary of the State Development and Investment Corp (SDIC), and Netherlands-based Royal Vopak will invest 7 billion yuan on a commercial oil reserve project in Hainan province, according to a statement on SDIC's website last week.

Located in Yangpu Economic Development Zone in Hainan, the project will involve the construction of a public oil terminal containing two 300,000-ton berths, two 100,000-ton berths and two 50,000-ton berths for crude and oil products, as well as a commercial oil storage base covering an area of 500 million sq m, the statement said.

Both parties refused to reveal the details of the project timetable or stock-holding information.

One industry insider said the project will help boost downstream businesses such as oil refineries, which matches Yangpu's plan to develop a large-scale petrochemical complex in the area.

Luo Baoming, governor of Hainan province, said the long-awaited launch of the commercial oil reserve base will lay a solid foundation for Yangpu to become an industrial base for oil, gas and petrochemicals.

Top gold producer sees profit surge

China National Gold Group Corp (CNGGC), the country's biggest gold producer, announced its profits in the January-May period had jumped 56.97 percent year on year, according to Shanghai Securities News.

The Shanghai-listed company attributes the profit increase to the mounting gold price, sped-up resource development pace and rising gold output.

Gold output of the country's leading gold producer and trader rises 49.69 percent in the first five months year on year.

No detailed figures of the gold production and profits from January to May are available, but it produces 70 tons of standard gold in 2007. Its profits stood at 620.5 million yuan last year.

The CNGGC said that it has found a new vein with an estimated 15 tons of gold at one of its mines in southwestern Guangxi Zhuang autonomous region.

The group has a total asset of 10.2 billion yuan and controls more than 30 percent of the country's gold reserves.

Airlines hike ticket surcharges

Air China Ltd and China Southern Airlines Co, the nation's two largest carriers, last week raised ticket surcharges on international flights by as much as 38 percent to help cover rising fuel costs.

The levy on journeys from China to North America and Europe rise to 1,100 yuan, said Huang Bin, board secretary of Air China. China Southern also boosts charges by the same amount, it said in a statement.

China Southern and Air China follow airlines worldwide that are raising surcharges, axing routes and trimming capacity to cope with jet-fuel prices that have doubled in the past year.

Cathay Pacific Airways Ltd, Hong Kong's biggest carrier, raised its levies 37 percent in June, its biggest increase since 2004.

China Southern also raised surcharges on short international routes including journeys from China to Southeast Asia, which will rise to 550 yuan from 420 yuan, according to the carrier's statement.

Chinese carriers raised ticket surcharges on domestic flights as much as 50 percent starting July 1 after the Chinese government raised domestic fuel prices by 25 percent as part of a wider government effort to cool economic growth.

Alibaba to expand its C2C arm

Taobao.com, China's top consumer-to-consumer site, will receive a further 2 billion yuan investment from its parent Alibaba Group over the next five years.

The decision was announced at the five-year anniversary ceremony of the group early this month by Ma Yun, founder and CEO of the Hong Kong-listed corporation.

"The 2 billion yuan investment will be spent in the next five years on technology, innovation, introduction of talent and other aspects," he said.

The huge amount is the third and largest investment from Alibaba since the establishment of Taobao.com, far exceeding the 1.45 billion yuan it received from its parent starting from 2003.

Ma set a long-term goal for Taobao.com to surpass US giant Wal-Mart, the world's top retailer, whose trading volume reached 3.5 trillion yuan globally last year. The estimated trading volume for Taobao.com this year was 100 billion yuan.

"Wal-Mart needs to buy more market sites, equipment and warehousing if they want to win another 10,000 customers. But for Taobao.com, we only need to get several new network servers," he said.

Taobao.com is currently the nation's dominant online retailer with 67 million registered accounts. About 10 million customers visit Taobao daily.

Yunnan Aluminum plans bond sales

Yunnan Aluminum Co, China's fourth-largest producer of the light metal, plans to sell 1.06 billion yuan of bonds to fund a new plant and repay bank loans.

The bonds are for six years, the company said in a statement to the Shenzhen Stock Exchange last week, without providing any details.

National Development and Reform Commission earlier this month approved an application by the metal producer to build an 800,000-ton-a-year alumina plant in Wenshan, Yunnan province. The company said last week the project will start production in 2013.

Yunnan Aluminum will also build a bauxite mine in Wenshan and a power plant for the project, the statement said. The mine will produce 1.8 million metric tons of bauxite a year.

(China Daily 07/14/2008 page6)