主题：【新闻】炒油炒到MARGIN CALL，中国航空石油（新加坡〕申请破产 -- 西风陶陶

China Aviation Seeks Court Protection After $550 Mln Oil Loss

Dec. 1 (Bloomberg) -- China Aviation Oil (Singapore) Corp., supplier of a third of China's jet fuel, will ask Singapore's High Court for protection from creditors after losing about $550 million from bad bets on oil prices.

The company suspended its chief executive and said it is negotiating a rescue by its Chinese parent company and Temasek Holdings Pte, Singapore's state investment agency, according to a statement submitted to the Singapore stock exchange yesterday. The parent company, China Aviation Oil Holding Co. in Beijing, and Temasek may each invest $50 million, the statement said.

The trading loss is close to China Aviation's market value of $570 million after a 49 percent slump in the stock since its all-time high on March 23. China Aviation, listed on the exchange in 2001, expanded into oil terminals and distribution and wanted to invest in a Singapore oil refinery.

``Their core business is in jet fuel trading, and they shouldn't have gone into other businesses,'' said Ong Eng Tong, a Singapore-based independent fuel consultant. ``Obviously, they went out of control.''

The company's shares soared as much as sevenfold after an initial share sale in late 2001 as it announced plans to refine, store and trade oil in Singapore, the Middle East and Europe. Singapore is Asia's biggest oil trading center, where about $100 billion worth of fuels are traded a year.

China Aviation said Nov. 16 that it would end most trading of oil and fuel derivatives because of losses. The company's stock fell 23 percent last week as a plan to buy a 20.6 percent stake in refiner Singapore Petroleum Co. was blocked by its parent company, which owns about 60 percent of the Singapore- traded shares.

Trading Halt

The shares closed at 96.5 Singapore cents on Nov. 26, before trading was halted two days ago on the Singapore Exchange pending an announcement. The suspension will continue until further notice, the company said.

The loss shows the risks that energy and commodity companies face when they start trading to insulate themselves from swings in prices for products ranging from oil to metals. Sumitomo Corp. lost $2.6 billion in 1996 in the copper market, while Metallgesellschaft AG lost more than $1.5 billion in oil trades in 1993.

Chief Executive Chen Jiulin has been suspended while the company conducts an investigation, to be led by board member Gu Yanfei. A loan of $100 million from the parent company, China Aviation Oil Holding Co., was inadequate to meet margin calls, cash needed to maintain a position in the market, the company said. Derivatives are contracts whose value is tied to another security, such as a stock, bond or commodity.

Margin Calls

``In October 2004, as the prices of crude oil were at an all time high at above US$55 per barrel, the company faced significant margin calls on its open positions and did not have the resources to satisfy the margin calls,'' the company said in the statement.

The company will propose a plan to creditors to pay debts and will ask the High Court of Singapore to fix a date to meet with creditors, the statement said.

The announcement revealing the size of the trading loss followed a series of statements and reports showing the company's strategies unraveling.

China Aviation pulled out of a joint venture with a unit of Emirates National Oil Co. to build a $135 million oil terminal in Singapore, said an official from the Emirates National unit.

China Aviation announced the planned joint venture in March and said it may buy as much as 20 percent of Horizon Terminals Ltd., Emirates National's fuel-storage unit, to help secure supplies from the Middle East.

Withdrew

China Aviation withdrew from the project in early November, and Horizon is talking to other investors, Yusr Sultan, Horizon's chief executive officer said in a telephone interview.

``The project is going ahead as planned,'' he said.

The proposed terminal in Jurong Island in western Singapore would be for the storage of crude oil, fuels and edible oil.

Fortune Oil Plc said it's in talks with China Aviation and its parent company to establish whether the recent drop in the shares will affect China Aviation's purchase of a 24.5 percent stake in Fortune's China unit.

U.K.-based Fortune Oil said in a stock exchange announcement today it told China Aviation and its parent about concerns over recent movements in the unit's share price and delays in getting approvals to buy Fortune Oil's stake in South China Bluesky Aviation Oil Co.

To contact the reporter on this story:

Nesa Subrahmaniyan in Singapore at [email protected].

To contact the editor for this story:

Robert Dieterich at [email protected].

Last Updated: November 30, 2004 14:35 EST