Fortune Oil, a key shareholder in takeover target China Gas Holdings, will not accept the unsolicited $2.2 billion bid from Sinopec and ENN Energy Holdings, a top executive at Fortune told Reuters.

"We will not sell the stock," Fortune Oil Chief Financial Officer Bill Mok said when asked whether Fortune would consider accepting the HK$3.50 per share bid from China Petroleum & Chemical Corp (Sinopec) and ENN.

Fortune's decision will be a blow to the Sinopec/ENN consortium's effort to gain control of China Gas after the piped gas distributor said the offer was opportunistic and failed to reflect the fundamental value of the company.

Fortune Oil's sway over the success of the deal was amplified after the London-listed company teamed up with the biggest single shareholder of China Gas Holdings, Liu Minghui.

The venture with Liu, a Chinese businessman with experience in the gas distribution industry, and his personal shareholding will emerge as the single largest stakeholder in the target company, Fortune Oil said in a statement.

"We are not a speculative (investor); we will hold the stake as a long-term investment because of its promising business prospects," Mok told Reuters in a telephone interview.

In December, China Gas hired Macquarie Group to advise on the deal after receiving the HK$3.50 per share cash offer from state energy giant Sinopec and ENN. The potential offer is conditional on more than 50% shareholder acceptance.

Fortune Oil also recently revealed that it had accumulated a 2.15% stake in China Gas, putting it among the company's top shareholders after individual shareholder Liu Minghui and some foreign shareholders such as South Korea's SK Group.

Liu held 8.06% of China Gas at the end of March 2011, China Gas annual report showed.

Buying China Gas will give Sinopec and ENN access to China's largest portfolio of natural gas projects. The company has piped gas operations in 151 cities and more than 100 compressed natural gas stations. Its gross profit in the six months ended September jumped 32% to HK$1.62 billion ($208 million).

China-focused Fortune Oil said the 50/50 joint venture with Liu would tap the boom in the country's gas consumption. The venture will own about 6.7% stake in China Gas as Liu contributed part of his stake, based on Reuters calculation.

Fortune Oil started accumulating shares in China Gas in November, before Sinopec and ENN made the offer, Mok said.

Fortune Oil acquired 94.04 million shares of the piped gas distributor for £24.2 million ($37.25 million), at an average price of HK$3.10 in the open market, he added.