Sunshine Oil (ASX: 02012) has announced that its subsidiary, Shenzhen Zhongwang Energy Technology Co., Ltd., has entered into a joint venture agreement with Shanghai Yinsheng Business Consulting Co., Ltd.

The new entity, named Shanghai Yinsheng Energy Co., Ltd., will be 51% owned by the Sunshine Oil subsidiary and 49% owned by Shanghai Yinsheng. Consequently, the joint venture will be consolidated as a subsidiary of Sunshine Oil.

The venture's operations will focus on decentralized geothermal energy projects and energy efficiency retrofits in China's Yangtze River Delta and Pearl River Delta regions, alongside the sales of smart heat pumps.

The primary objective of establishing this joint venture is to accelerate the diversification of the company's business portfolio. This strategic move is expected to enhance the company's revenue and cash flow, particularly during the maintenance period of its Canadian projects.

Shanghai Yinsheng's controlling shareholder, Chen Jie, brings over a decade of experience in equity investment and substantial expertise in industrial capital operations to the partnership.