China's state-run oil giant Sinopec plans to break off its oilfield engineering department and list it on the Hong Kong stock exchange, the Oriental Daily reports, though Sinopec has denied the report, according to a different newspaper, the Securities Daily.

According to the Hong Kong-based Oriental Daily News, the spin-off is going to start its initial public offering process in March and is expected to raise as much as HK$10 billion (US$1.2 billion). China International Capital Corporation will be the main sponsor of the IPO.

The company is set to submit its application to the Hong Kong bourse between June and July.

The new company is expected to be valued at more than three times China Oilfield Services, a company in the offshore China market which hit HK$78.5 billion (US$10.1 billion) on the Hong Kong exchange on Monday.

The report was denied by Sinopec on Monday.

The news began spreading when Fu Chengyu was appointed chairman of Sinopec in March last year.

Huang Wensheng, spokesperson for Sinopec, told the Securities Daily that the group plans to reform its oilfield engineering services department and enforce professional management.

"Professional management and a spin-off IPO are not the same concept," Huang told the Securities Daily.