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China Petroleum & Chemical Corp. (SNP - Analyst Report), aka Sinopec, intends to acquire international upstream oil and gas assets from its parent company, China Petrochemical Corp., or Sinopec Group, in order to spread its footprint globally. In this regard, Sinopec is eyeing assets in countries such as the U.K., Russia, Colombia and Kazakhstan.

The transaction -- expected to occur in April this year --  would position Sinopec on the same platform with other international energy giants  like ExxonMobil Corp. (XOM - Analyst Report), Chevron Corp. (CVX - Analyst Report) and Royal Dutch Shell Plc (RDS.A - Analyst Report).

Sinopec Group has already spent $34 billion on several contracts in the U.K., U.S., Canada, Brazil, Argentina and Australia over the last three years. The group holds a 76.28% interest in Sinopec, which took over its parent’s 50% share in a deepwater oil asset -- Angola's Block 18 -- for $2.46 billion in 2010.

Sinopec has very few international oil and gas assets and hence intends to acquire the overseas upstream assets of its parent company partly to minimize the adverse effect that China's measures to control fuel price have on its results.

China has a huge energy requirement being the world's second-largest economy. In December 2012, Sinopec Group acquired a 49% stake in the U.K. North Sea oil and gas assets from Canada's Talisman Energy Inc. (TLM - Analyst Report) for a total consideration of $1.5 billion. In April 2012, it purchased five U.S. assets from Devon Energy Corp. (DVN - Analyst Report) for $2.44 billion.

The Chinese energy companies have moved more carefully after CNOOC’s attempt to acquire U.S.-based exploration and production company Unocal for $18.5 billion was disappointed by a political backlash eight years back. The deal was rejected by U.S. lawmakers on fears of disturbing national security.

Notably, China's largest offshore oil and gas producer by capacity, CNOOC Ltd. (CEO - Analyst Report) has cut a deal in July last year to purchase Canadian energy producer Nexen Inc. for approximately $15.1 billion in cash. The deal is the country’s biggest foreign takeover so far. The acquisition of Nexen is in sync with the present strategy of Chinese biggies to make a deeper international foray in order to meet domestic demand.

Sinopec retains a Zacks Rank #3 (Hold). Longer term, we maintain our Neutral recommendation for the company.

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