(EnergyAsia, January 25 2012, Wednesday) --- China Aviation Oil Singapore Corporation Ltd (CAO), the largest physical jet fuel trader in Asia, said it will pay a total of US$16 million to acquire two jet fuel companies from its parent company, China National Aviation Fuel Group Corporation (CNAF).

CAO will pay HK$91 million or US$12 million for China Aviation Oil (Hong Kong) Company Limited (CAOHK), which trades and supplies jet fuel at airports in Hong Kong, China, Taiwan and London, and US$4 million for North American Fuel Corporation (NAFCO), an agent and wholesaler of jet fuel in the US.

CAOHK was established in May 1998 while NAFCO started operations in 2010. Both companies are wholly-owned subsidiaries of CNAF.

Wang Kai Yuen, CAO’s deputy chairman and lead independent director, said:

“In view of the globalised trading flow of oil products, a strategic focus of CAO is to establish a global trading network by 2014. The acquisitions of CAOHK and NAFCO are in line with this strategy.

“Not only are these acquisitions earnings accretive, CAOHK and NAFCO are synergetic assets that can create additional value to our trading activities. CAO intends to integrate these businesses with the CAO group to expand its geographical reach, extend its business chain and enhance its competitiveness.”

Sun Li, chairman of CNAF and CAO, said:

“CAOHK and NAFCO are established businesses with good growth potentials. This transaction is a significant step for CNAF in consolidating its overseas operations into CAO. CNAF believes this will help accelerate the pace of CAO establishing a global business network.

“CNAF will be using CAO as the platform to grow and expand its international businesses in Hong Kong, North America and other markets. As CAO is the core entity for CNAF’s internalisation strategy, CNAF will continue to support CAO’s growth initiatives.”

Meng Fanqiu, CEO of CAO said, “CAOHK and NAFCO are highly synergetic to CAO’s core business of jet fuel supply and trading and will expand the geographical footprint of CAO’s business to new markets, including term contracts to supply jet fuel to airlines at airports at Shenzhen and other China domestic airports, Hong Kong, Taiwan and Los Angeles and Anchorage in the US. This will enable CAO to accelerate its pace of building the global network.

“The integration of the businesses of CAOHK and NAFCO into the CAO group will enable CAO to consolidate its trading business and strengthen CAO’s position and competitiveness as the largest physical jet fuel trader in the Asia Pacific region. In addition to potential synergies, CAO will be able to realise benefits such as an increase in revenue from the cross-selling of products and savings in storage and freight costs.”

CAO, the leading supplier of imported jet fuel to the Chinese civil aviation industry, also trades jet fuel and other oil products.

The Singapore-listed company also owns investments in in the Shanghai Pudong International Airport Aviation Fuel Supply Company Ltd and China National Aviation Fuel TSN-PEK Pipeline Transportation Corporation Ltd.