Chinese Super-Majors Gain on Sinopec-Shell Agreement

Michael Teague |

Compared to their peers in the US, China’s largest oil and gas “super-majors” have had a fairly rough year.

Shares for ExxonMobil (XOM) have advanced just over 10 percent year-to-date, while Chevron (CVX) has topped that performance with a gain of over 14 percent. China Petroleum & Chemical Corp. (SNP) , otherwise known was Sinopec, has lost just over two percent, and China’s top oil company PetroChina Ltd. ($PTR) now has shares that have shed nearly one-fifth of their price since the beginning of 2013.

Friday’s trading session saw a brief reprieve from this situation, however, with shares for Sinopec and PetroChina moving sharply upward and handily outperforming its competitors in major integrated oil and gas industry.



For Sinopec, today’s gains come as a result of its morning announcement that it would be partnering with Royal Dutch Shell ($RDS.A) to probe the shale formations beneath central China in order to search for gas resources.

Despite how much has been written about the US’s so-called “shale boom,” China is thought to have the largest reserves of natural gas on the planet. The effort to tap in to these badly-needed reserves has been mostly stymied, however, by significantly more challenging geological conditions, as well as an oil industry that has yet to develop the necessary technology.

And while Shell is certainly not the first of the world’s major petroleum producers to collaborate with its counterparts in the world’s most populous country, it is the first foreign company to have been awarded the privilege of entering into a production-sharing contract with one of them, and this has been interpreted as a sign that more such opportunities will be opening up in the future, as China struggles to reduce its reliance on coal.

PetroChina’s gains on the day are not unrelated. On Thursday, its parent company, China National Petroleum Company, concluded a deal with another state-run oil major Petrobras ($PBR), to purchase its entire stake in the Brazilian giants subsidiary in Peru for a reported $2.6 billion.

In midday trading, both Sinopec and PetroChina were trading about 4.6 percent higher at $116.60 per share and $85.80 per share respectively.

DISCLOSURE: The views and opinions expressed in this article are those of the authors, and do not represent the views of equities.com. Readers should not consider statements made by the author as formal recommendations and should consult their financial advisor before making any investment decisions. To read our full disclosure, please go to: http://www.equities.com/disclaimer

Companies

Symbol Name Price Change % Volume
CVX Chevron Corporation 107.99 0.12 0.11 6,339,900 Trade
PBR PETROLEO BRASILEIIRO SA PETROBRAS 9.06 0.01 0.11 25,362,756 Trade
SNP China Petroleum & Chemical Corporation 79.19 0.44 0.56 83,923 Trade
PTR PetroChina Company Limited 74.52 -0.11 -0.15 45,970 Trade
XOM Exxon Mobil Corporation 81.23 -0.63 -0.77 9,128,489 Trade
CNVT Cvf Techs Corp 0.00 0.00 0.00 0
RDSA Royal Dutch Shell Plc ADR Sponsored Repstg A Shs n/a n/a n/a 0 Trade

Comments

Emerging Growth

Taranis Resources Inc.

Taranis Resources Inc is an exploration stage company. The Company along with its subsidiaries is engaged in the acquisition and exploration of mineral properties. Its projects include Thor Property in…

Private Markets

XY Find It

Founded by serial entrepreneur Arie Trouw, XY Findables follows a single guiding principle: customers should never lose anything important again. With over 50,000 users around the world, more than 100,000…

WayBetter

The spark hit Jamie when he saw co-workers competing to lose weight. Instead of pizzas and subs, they were eating salads and jogging along the river. Some were sneakily leaving…