Chinese oil firm completes acquisition of US shale gas blocks

BEIJING: China Petrochemical Corp. ( Sinopec), the country's second-largest oil producer, today said it has completed the acquisition of one-third of the equity of Devon Energy Corp's five shale gas assets in the United States.

The acquisition cost Sinopec nearly USD 2.44 billion. The five shale gas blocks owned by the US-based Devon are Niobrara, Mississippian, Ohio Utica Shale, the Michigan Basin and Tuscaloosa Marine Shale, Sinopec said in a statement on its website.

Shale gas is found in sedimentary rocks below the earth's surface.

The acquisition is Sinopec's first effort to enter the oil and gas exploration and development business in the US.

The move will enable Sinopec to capitalise on Devon's proficiency in producing oil and gas from shale and other unconventional basins, as part of China's drive to develop clean energy, Xinhua quoted analysts as saying.

Sinopec has made a USD 732-million cash payment and will pay the remainder in the form of a drilling carry.

The entire USD 1.71-billion will be realised by the end of 2014, according to Sinopec's statement.

Drilling carry is an accounting arrangement used in energy joint ventures. In this case Sinopec will finance the drilling expenses of Devon during a defined period.