HONG KONG (Yonhap) -- 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 Ltd. and state energy giant China Petroleum & Chemical Corp. (Sinopec), financial officials said Tuesday.
Late Monday, Hong Kong-listed China Gas Holdings said 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.
"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," said Frank He, an analyst at Goldman Sachs.
"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 percent from 4.42 percent, following Sinopec's cash bid to buy China Gas for US$2.2 billion last December.
The South Korean firm, an affiliate of 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 Ltd., 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 HK$350 ($45) 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 by the public security bureau in the southern Chinese city of Shenzhen for embezzlement.