China’s petro-chemical conglomerate HaldiaPetrochemics is to acquire petro company Haldialab.
The two firms are in a joint venture to develop petro chemicals in China, the companies said.
Haldia is an oil and gas company and Haldiab is a chemical producer, and it will operate Haldion petro and Haldo petro, the company said.
Haldion will focus on petro products including fertilisers and pesticides, the two companies said in a statement.
In January, the government approved Haldiac’s application to buy the company, but the deal was blocked after the Chinese government said the two entities could not be considered a single company.
The companies said Haldium was set to receive a $6.6bn loan guarantee from the state-owned China National Petroleum Corporation (CNPC), which has about $3.6tn in debt.
Chinese state-controlled firms have been among the largest foreign investors in Chinese companies, and their investments have helped transform the countrys economy from a largely agrarian economy to one that relies heavily on the petro sector.
Haldi is China’s largest petro chemical company, with annual sales of $5.6 billion and an operating profit of $3bn last year, according to data compiled by Bloomberg.
It also has an extensive chemical and petro production network, including the Petrochemical Industry Corporation of China (PIOC), which is a state-backed enterprise that makes petro fertiliser, chemicals and pesticides.
Haldi and HaldiPetro have been under investigation in China for alleged mismanagement of the petrodollars of the two firms, including an investigation into whether they were improperly selling their chemicals abroad.
Earlier this year, a report by the US Senate Judiciary Committee said the petrol industry in China is the most vulnerable sector in the country’s economy and has “serious weaknesses” that could lead to further market volatility.
China has been battling a wave of deadly industrial accidents, which have left at least 10,000 people dead since April.