Pembina Pipeline is to buy fellow Canadian company Provident Energy in a $3.1bn deal.

The acquisition will create a business that operates in oil and gas fields in the US and Canada, including regions with vast shale gas reserves.

Provident’s assets include gas fractionation plants, which extract propane, butane and other petrochemical feedstocks, as well as gas pipelines and storage facilities.

Pembina chief executive Bob Michaleski said that the company’s “expanded footprint will provide greater access to natural gas liquids markets across North America”.

Meanwhile, the strategic importance of China’s natural gas market has been underscored by the battle to buy China Gas, a relatively small gas distribution company.

It has already rejected hostile takeover bids from China’s state-owned oil and gas giant Sinopec and another domestic gas distributor, ENN. Since then, China Gas shareholders have increased their stakes in the firm in anticipation of renewed bids from the two companies.

Laban Yu, an oil and gas analyst at Hong Kong-based Jefferies, told the Financial Times that “gas is just starting out as an energy source in China. Natural gas demand is expanding 19 per cent a year so a lot of new distribution is going to be built.”

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