Car ownership is growing rapidly

Sinopec revealed a $553m (�301m) asset swap with its parent firm, giving it more petrochemical plants and extra petrol stations.

Analysts applauded the deal, saying it would improve Sinopec's structure, enabling it to gain from roaring demand for petrochemicals and private cars.

Shares in Hong Kong listed Sinopec rose 4.2% on news of the restructuring.

Sinopec said the deal was designed to achieve "rapid expansion of the scope of the core business".

Retail and refining

Sinopec will ditch a loss-making oil field services business, passing it back to its parent firm, China Petrochemical, in exchange for profitable chemical plants. The chemical industry is doing well as a result of China's manufacturing boom.

The deal "allows Sinopec to further leverage on the up cycle of the chemical industry", said Michael Lee, an analyst at UOB Kay Hian in Hong Kong.

Sinopec will also acquire 1,023 petrol stations from China Petrochemical. Demand for petrol is growing rapidly alongside car ownership.

Car sales have doubled since 2000 to 4.4 million last year, and are expected to reach 10 million a year by 2010, according to an industry study by KPMG.

Car ownership levels remain low in China - at 0.5 cars per 100 people compared with 55 per 100 in Germany - suggesting huge scope for expansion as long as the economy continues to thrive.

Sinopec will pay for the assets with shares and 1.75bn yuan ($211m; �115m ) in cash.

Sinopec, which remains 77% state-owned, is typical of Chinese firms in nationally important industries in being created from disparate enterprises.

Analysts believe such firms need to restructure themselves into better-focused businesses.