Reuters: China's Sinopec Hunting U.S. Shale Deals, But Prices High

Sinopec, the world's second-biggest oil refiner, is on the hunt for minority investments in U.S. shale oil and gas projects as it seeks to diversify China's supply sources, a senior company official said.

The Chinese state energy firm is keen to take a 10-15 percent stake in projects to export liquefied natural gas (LNG), said Jack Yu, managing director of Sinopec D.C., which handles government relations in the U.S. Previous talks over investing in Freeport LNG's project in Texas fell through, he said.

New deals, if they materialize, would come more than two years after Sinopec made waves with two big U.S. investments, spending more than $3 billion buying various shale stakes from Devon Energy and Chesapeake Energy.

Yu says that although oil prices have fallen to half of what they were a year ago, valuations on U.S. assets remain elevated, limiting opportunities for bargain hunting.

"The asking price is not low," he said last Thursday.

Sinopec is at the fore of China's drive to diversify energy supplies to meet growing demand. While it has been successful in sourcing more oil globally, it has made little headway building out a global LNG portfolio, which is critical for reaching Beijing's target of a 10 percent share for natural gas in China's energy mix in 2020 - double the current share.

"Not only do we want to be an LNG buyer, we also want to invest in projects and become shareholders," Yu said. MORE