China Petroleum & Chemical Corporation (Sinopec) has set up a new unit to invest in overseas petrochemical and refining assets, reported Reuters.

The new company, known as Sinopec Overseas Investment Holding, is an effort by Sinopec to use its resources and experience to expand internationally as domestic Chinese oil demand approaches a point of saturation.

Sinopec launched the unit in June 2023 as its only vehicle for investing, setting up and running refineries outside China.

According to two company officials, Sinopec is now forming the staff as well as setting a financial plan for the new company.

The Chinese refiner is making a push abroad as local government has restricted the development of new refineries domestically due to slowing demand growth and overcapacity, the report said.

It also comes amid a shift in the market towards more expensive resources and products for the energy transition.

The company declined to comment on the exact regions or assets it is aiming for.

However, a senior official stated that the company will prioritise sites where demand is increasing and feedstock is widely available.

A possible destination for one of these investments could be Sri Lanka, where Sinopec was shortlisted to compete for a refinery in Hambantota that is targeted towards exports and might be worth billions of dollars.

After reaching a preliminary deal with Saudi Aramco in last December, Sinopec would also look into expanding the Yasref refinery in Yanbu, Saudi Arabia, the Sinopec official told the news agency.

The $10bn Amur Gas Chemical Complex in East Siberia, built in partnership with Sibur of Russia, and the 400,000 barrels per day Yasref refinery are among Sinopec's current foreign projects.