Sinopec makes $2.2bn shale deal with Devon

CHINESE oil company Sinopec has sealed a $2.2bn (£1.4bn) deal with Devon Energy to give it access to shale deposits in the US.

Sinopec will get a one-third stake in five new shale projects, and the companies expect to drill 125 wells this year.

China has been buying energy sources to maintain its fast-growing economy, and wants to improve its ability to exploit shale deposits.

Analysts said that the recent spike in demand for shale oil and gas meant that tie-ups were proving the way forward.

France’s Total earlier in the week announced a separate $2.3bn shale deal with Chesapeake Energy and EnerVest.

The Sinopec deal will see the company paying $900m in cash, with the remainder of the investment being paid by the end of 2014.

The payments could clock up top $2.5bn in total.

“This arrangement improves Devon’s capital efficiency by recovering our land and drilling costs to date and by significantly reducing our future capital commitments,” John Richels, president and chief executive of Devon, said in a statement.