China Gas, Sinopec near venture deals
The two firms were in advanced talks on setting up a venture to distribute liquefied petroleum gas (LPG) produced by Sinopec's oil refineries and sell compressed natural gas (CNG) at its petrol stations, China Gas chief financial officer Eric Leung Wing-cheong said.
City natural-gas distributor China Gas, which fended off a hostile takeover bid last year from rival ENN Energy and oil and gas major China Petroleum & Chemical (Sinopec), has made steady progress in negotiations with Sinopec on forming joint ventures, according to its finance chief.
"We are also in talks on Sinopec's possibility to raise its stake by buying more China Gas shares," Leung said. "From China Gas' point of view, we would prefer that the sale of shares and the joint-venture agreements be negotiated and signed as a package."
Frank Li Yuntao, the general manager of investor relations at China Gas, said the talks were "in the final stages".
Leung said China Gas would inject its LPG distribution assets into the proposed joint venture, and the company would become a non-exclusive distributor of the gas from Sinopec in regions where China Gas has LPG storage facilities.
China Gas' retail sales of the gas amount to about 1 million tonnes a year, while Sinopec's domestic refineries produce about 12 million tonnes a year.