Shell, PetroChina set gas exploration deal
BEIJING, China
Royal Dutch Shell PLC said Tuesday it had agreed to explore for natural gas with China National Petroleum Corp in the southwestern province of Sichuan, the second deal between the companies announced this week.
Shell Chief Executive Peter Voser told a news conference in Beijing that Shell and CNPC unit PetroChina Ltd had signed a 30-year contract to jointly develop and produce natural gas in Sichuan.
Shell, Europe’s largest oil company, said a production-sharing contract has been sent to China’s central government for approval, but Voser would not reveal the terms of the deal or when approval was expected. “We hope very soon,” he said.
Fast-growing China is hungry for fuel, and Shell is eager to find new business in the world’s No 3 economy. Shell last week announced its net profit in 2009 fell by more than 50 per cent from the year before because of declining oil prices and slimmer refining margins.
The company wants to boost production by 11 per cent by 2012, and Voser said Tuesday that Shell will be producing more gas than oil at that point.
Demand for natural gas has far outstripped supplies in China, with shortages causing widespread electricity and heating shortages during the winter months.
Shell and PetroChina, Asia’s largest oil and gas company, also jointly operate the Changbei gas field in China’s northern province of Shaanxi, which Shell says supplies three billion cubic meters of natural gas to cities in eastern China.
Shell officials said it was too early to compare the scale of the new project with the Changbei one.
Tuesday’s announcement came a day after a joint takeover bid from Shell and PetroChina worth US$3.15 billion was accepted by Arrow Energy Ltd, an owner of gas assets in Australia.
China is the world’s second-largest oil consumer after the United States, and its state-owned suppliers have signed a multibillion-dollar flurry of deals to import petroleum and develop sources abroad.
Shell has said it is talking with PetroChina and China National Offshore Oil Corp on building and running new refinery capacity. “We’re open to other discussions here if that will materialize,” Voser said Tuesday.
Peter Voser, chief executive officer of Royal Dutch Shell PLC wearing a head set for translation from Chinese media personal, gestures during a press conference in Beijing, China, Tuesday, March 23, 2010. (Photo: AP)
