Sinopec Corp, Asia's largest refiner, agreed to form a 50-50 joint venture with its parent to acquire US$3 billion worth of overseas oil and gas assets from the latter to strengthen reserves and production.
Chairman Fu Chengyu is leading the asset-injection drive, and the transaction will boost its profitability and facilitate its objective of becoming a more global oil company with significant oil and gas assets, according to a Sunday statement.
The joint venture will boost Sinopec's production by 4.2 percent and reserves by 3.2 percent, according to Sanford C. Bernstein analysts.
Three upstream assets from Kazakhstan, Russia and Columbia will initially be injected into the joint venture.
"Although the deal size is relatively small compared to Sinopec's market cap of US$98 billion, we believe this upstream asset acquisition is one of many to come in the months ahead, and will certainly improve the overall profitability of the firm amid prevailing US$100-plus oil prices," Mirae Asset Securities analyst Gordon Kwan said.
Sinopec's parent, China Petrochemical Corp, has spent nearly US$40 billion in overseas oil and gas deals since 2010, gaining access to fields in Argentina, Russia, Canada, Iraq and West Africa.
Sinopec's only current overseas upstream asset is a stake in a deepwater oil field offshore Angola, which was acquired from its parent in 2010.