Yonhap reported that South Korea's leading city gas provider SK E&S Co has yet to see whether it will benefit from a deal struck between China Gas Holdings Limited and state energy giant China Petroleum & Chemical Corporation (Sinopec).

Hong Kong listed China Gas Holdings said that it has entered into a strategic cooperation framework agreement with Sinopec, while Sinopec said it has ended a nearly yearlong attempt to take over the former in a hostile move.

SK E&S is one of the three largest shareholders in China Gas.

Mr Frank He, an analyst at Goldman Sachs, said that "We view the frame work agreement as an alternative way for Sinopec to gain exposure to China Gas' gas distribution assets. Also, we think China Gas could leverage Sinopec's natural gas supply and petrol station network to drive gas sales and roll out compressed natural gas stations."

He added that "But it remains to be seen whether synergies can be derived between China Gas and Sinopec's liquefied petroleum gas business, as expected by China Gas management."

SK E&C has increased its stake in China Gas to 13.09% from 4.42%, following Sinopec's cash bid to buy China Gas for USD 2.2 billion in December 2011.

The South Korean firm, an affiliate of South Korea's third largest conglomerate SK Group, said such a move was part of its ongoing efforts to expand its presence in China's city gas sector.

China Gas rejected the offer given by the world's fourth biggest firm by revenue and Chinese gas distributor ENN Energy Holdings Limited, saying the offer did not reflect the company's actual value.

Since then, the China Gas shares have been on a steady rise, hovering above the HKD 350 per share.

China Gas is China's only Hong Kong listed gas company with mainland Chinese government shareholding. Two senior executives of China Gas were arrested in February 2012 by the public security bureau in the southern Chinese city of Shenzhen for embezzlement.

Source - Yonhap News

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