Shenzhen Nanshan Power Station is refusing to pay Goldman Sachs for losses incurred on oil-related derivatives, claiming the transactions with the US investment bank were unauthorized, the Wall Street Journal reported. The sum in question is believed to run to tens of millions of dollars. This is not big compared to the losses run up by other Chinese companies – such as Air China and China Eastern Airlines – that hedged their oil exposure. However, it is feared that Shenzhen Nanshan’s actions could set a precedent for these larger players to dispute their losses. Goldman’s Singapore commodities unit, J. Aron & Co, acts as the counterparty for a number of oil derivatives transactions by Chinese companies. Shenzhen Nanshan said it is in negotiations with Goldman on the issue, but refused to rule out possible legal action.
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