Securing Energy Resources

Robert Hsu, May 26, 2009

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In addition to the deal with Brazil's Petrobras, Sinopec is in talks for a second deal. This one is with Exxon Mobil to purchase 2 million tons of liquefied natural gas (LNG) per year, and control its LNG ownings in Papua New Guinea. No final deal has been made yet.

This potential deal with Exxon comes on the heels of an LNG purchase agreements that Sinopec signed recently with Qatar, Australia, Indonesia and Malaysia. The Chinese government has been seeking ways to expand its LNG market, with plans to more than double LNG import capacity by 2015.

All of Sinopec's new deals exemplify the Chinese government's current efforts to boost China's economy through securing its energy resources. With oil, it's trying to control prices, since they have the potential to skyrocket globally -- as we saw last year. And the deals regarding LNG will help boost the country's efforts in the green sector.

Overall, I think that both of these deals bode well for Sinopec's stocks. Shares have been somewhat volatile since my recommendation in October. But I'm not too worried about fluctuations in this stock over the next few days, or weeks because one thing's for sure -- the Chinese government will continue to support the company.

To receive all my thoughts and investment advice regarding Sinopec, join Asia Edge today.

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Securing Energy Resources

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