China Petroleum and Chemical Corporation
) is discussing the purchase of a minor stake in Kitimat
liquefied natural-gas (LNG) project with U.S. energy firm
). China Petroleum and Chemical Corporation, also known as
Sinopec, is one of the largest petroleum and petrochemical
companies in Asia.
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Details relating to the purchase have not been disclosed.
Moreover, Sinopec's management has not sanctioned the investment
yet. However, a source revealed that Sinopec's stake investment
will be utilized to fund the LNG project.
The Kitimat LNG development includes undeveloped shale assets
covering roughly 644,000 acres of land, pipelines and a
processing plant of LNG. Apache owns 50% of the project whereas
), U.S. energy behemoth, holds the rest.
China is now consuming roughly 5% natural gas out of its total
primary energy consumption. Government of China is focusing to
increase it to 10% by 2020. However, China is not in a position
to support the increased gas consumption through domestic
production. To tap this opportunity, Sinopec is considering the
investment in the Kitimat project.
Sinopec with its head office in Beijing, China, is the second
largest crude oil and natural gas producer, and the largest
refiner and marketer of refined petroleum products in China. The
company is also the largest producer and distributor of
petrochemicals in the nation.
Sinopec has been exploring expansion and acquisition
opportunities offshore and abroad to reduce its exposure to
mature domestic markets. However, competition from domestic and
international peers, as well as the possibility of time-consuming
government deregulation and internal company restructuring, make
near-term progress difficult.
Sinopec currently holds a Zacks Rank #4 (Sell), implying that it
is expected to underperform the broader U.S. equity market over
the next one to three months.
However, one can consider a better-ranked energy player like
SM Energy Company
) that offers value. The stock sports a Zacks Rank #1 (Strong