Chinese Tidbits

Sinopec - Sinopec Group, and the Iranian oil ministry on Sunday signed a contract on the development of the Yadavaran oilfield in southwestern Iran. The initial estimation of the project's cost is about US$2 billion. The first phase to produce 85,000 barrels per day will be carried out in four years and the second phase to produce another 100,000 bpd will be carried out in another three years. According to Iranian estimates, the Yadavaran field has in-place oil reserves of 18.3 billion barrels and gas reserves amounting to 12.5 trillion cubic feet, of which 3.2 billion barrels and 2.7 trillion cubic feet are recoverable respectively.

Blackstone & CIC - Private equity firm Blackstone Group is assembling a consortium for the purpose of submitting a counterbid for Australian miner Rio Tinto, currently the target of a hostile offer by BHP Billiton. The consortium is said to include China Investment Corp., China's US$200 billion sovereign wealth fund. Rio is planning to defend itself from Billiton's three-for-one offer by selling up to US$30 billion in assets, possibly including the talc business, two uranium projects, the Northparkes copper and gold mine in Australia and the US Greens Creek zinc, lead and silver mine. Blackstone wants to buy the company and break it up completely. Blackstone's primary target is Rio's iron ore operations, which Blackstone values at a minimum US$110 billion based on existing reserves -- though further mineralization in the Pilbara in Australia and at the Simandou project in Guinea could push that figure considerably higher. The Chinese steel industry is a massive consumer of iron ore and has expressed concern that a Rio-Billiton combination could control the market. Blackstone has close ties to China, feeding speculation that China is involved in the pending bid: China Investment Corp. bought a 10% stake in Blackstone for US$3 billion just prior to its IPO.

QDII To Triple In Size - China plans to triple the quota for foreign investors to invest in the country's stock and bond markets under its qualified foreign institutional investors (QFII) scheme. The ceiling will be increased to US$30 billion from the current US$10 billion. To date, a total of 49 institutions have acquired QFII quotas, and the value of their portfolio has increased to 200 billion yuan (US$26.5 billion). The QDII program is supposed to help investors reduce risks by widening the investment channels of domestic capitals, and to help expand Chinese residents' investment in overseas stocks.