Sinopec set to acquire Canadian oil and gas explorer

China's rapid economic growth has increased the demand for oil products

China's Sinopec has agreed to buy Canadian oil and gas company Daylight Energy for about 2.2bn Canadian dollars ($2.1bn, £1.4bn).

Sinopec is a subsidiary of China Petrochemical Corporation, the country's largest refiner.

The deal is subject to approval from the shareholders of Alberta-based Daylight Energy.

The transaction would be the latest in a string of energy sector deals between China and Canada.

China has been looking abroad for its growing energy needs.

"This deal highlights the firm's interest to expand globally," said Gordon Kwan from Mirae Asset Securities in Hong Kong.

However, Mr Kwan said the benefit for Sinopec was not immediately clear.

"The deal is too small to grow reserves for Sinopec, which has a market cap of over $80bn".

Shares in Sinopec fell more than 5% in early trade on Monday.

Last year, Sinopec paid $4.65bn to buy a stake in Syncrude Canada. In July CNOOC, China's largest offshore oil producer, announced it would spend more than $2bn to acquire bankrupt OPTI Canada.

Investors have been weary of Canadian oil and gas shares in recent months, as falling oil prices and high debt levels have hurt growth prospects.

Daylight's share price has plummeted 54% in the last year, according to data compiled by Bloomberg news agency.

The company confirmed on Sunday that its board had agreed to be acquired by Sinopec.