Chinese firm Yangzijiang Shipbuilding is reportedly engaged in talks to acquire China Huarong Energy, which was formerly known as China Rongsheng.

Yangzijiang executive chairman Ren Yuanlin said that the decision on the investment is expected to be confirmed by end-June, Reuters reported.

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"In the long run, China will still need to produce vessels and machinery related to the offshore industry."

Yuanlin was quoted by the news agency as saying: "The government, banks and Rongsheng’s major shareholder all hope we can be part of the deal, but whether or not we will get in depends on the asset price.

"We are not interested in anyone else but Rongsheng."

China Huarong Energy has recently expanded its operations into oil and gas development and production.

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Yuanlin said that this proposed deal will help the shipbuilder in terms of expanded capacity and assets, and also with the existing value-added offshore shipbuilding capabilities, IHS Maritime reported.

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He was further quoted as saying: "In the long run, China will still need to produce vessels and machinery related to the offshore industry.

"RSHI has such capabilities and it will be beneficial to whomever acquires it."

Speaking at a post-earnings briefing in Singapore, Yuanlin also said that the country’s shipbuilding industry would shrink significantly in the next three years since the number of active shipyards in China would be decreased to approximately 30 as shipping companies enter a period of consolidation.