Royal Dutch/Shell Group has sold its holdings in China Petroleum & Chemical Corp. (Sinopec), the nation's second-largest oil company, raising HK$5.8 billion (US$742 million) before expenses, Shell said yesterday.

Shell has almost doubled its money since it bought into Sinopec's initial public offering for about HK$3 billion (US$384 million) in 2000.

The market has been guessing about Shell's possible sell-off after its global rival BP uploaded US$2.4 billion by selling holdings in PetroChina, China's largest oil company, and Sinopec in January and February.

Analysts forecast that ExxonMobil, the only major multinational that is still holding stakes in Sinopec, may follow the trend to cash in on the current share price. Shell said that it sold the 1.9 billion shares, or 2.1 percent, of Sinopec at HK$3.13 (40 US cents) per share.

The company said it is still committed to the Chinese market and the share sales will not affect its relationship with its Chinese partner.

"Sinopec remains a valued partner of Shell and we are jointly developing a number of projects," Shell's statement said.

Shell China Chairman Heng Hock Cheng said his company will invest US$1 billion in the Chinese market, which will be Shell's largest annual investment in the nation.

Shell will proceed with joint projects involving Sinopec, including natural gas exploration in the East China Sea, a coal conversion project and a retail joint venture in Jiangsu Province.

Shares in Sinopec slipped 4.6 per cent to HK$3.10 (40 US cents) yesterday in Hong Kong.

Analysts said Shell's move may create liquidation concerns among investors that may drag down the share prices in the short term.

But in the long-term, it will increase Sinopec's liquidity.

(China Daily March 19, 2004)