OREANDA-NEWS. April 22, 2014. Sinopec Corp (NYSE: SNP, HKG: 0386, SHA: 600028), China's biggest refiner, has signed a deal with American energy firm Phillips 66 (NYSE: PSX) in what bodes for the United States becoming China's major liquefied petroleum gas.

China, the world's biggest LPG consumer and importer, uses the energy for heating and transport purposes.

China's growing demand has pushed up US LPG production, which is not subject to export limit. The United States limits exports of crude oil and liquefied natural gas due to energy security concerns.

China sealed first US LPG deal last year. It currently imports 3,530 barrels per day, according to China Customs figures.

The contract between Sinopec and Phillips 66 marks a notable step forward in the two countries' LPG trade. Under the terms, Phillips 66 is expected to supply LPG to Sinopec starting 2016, with a daily amount of 34,000 barrels, valued at USD850 million at present.

The booming shale gas and oil sector in the United States will probably help China develop its own, said senior Sinopec analyst Mao Jiaxiang.

The United States is expected to export 635,000 to 795,000 barrels of LPG per day by 2020, by which point China will need to import 500,000 barrels per day, energy consultancy Facts Global Energy predicted.

Large LPG output will pit the United States against the Middle East for wooing energy buyers, Asia Pacific Energy Consulting analyst Al Troner argued.