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Shell seeks China partner for Iraqi development

Financial Times

By William MacNamara

Published: April 15 2009 03:00 | Last updated: April 15 2009 03:00

Royal Dutch Shell has held talks with some of China’s biggest state-owned oil companies to bid jointly for oil licences in Iraq, Shell’s chief executive said.

“We indeed have had discussions about bidding,” Jeroen van der Veer said in Beijing, according to Reuters. “Chinese companies for certain are part of the bidding partnerships.”

Mr van der Veer was in China with Peter Voser, finance director, who is due to take over as Shell’s chief executive in July.

More than 30 global energy companies are bidding to develop huge oil and gas fields across Iraq, a tender process that is part of the post-war government’s attempt to almost double oil output – and boost state revenues – over the next four years. The winners of the first bid round will be announced this summer.

Shell said discussions with potential partners were at an early stage, and would not comment on any details.

An Iraqi joint venture between Shell and any state-owned Chinese oil company could be advantageous to both sides.

Sinopec, Sinochem, and China National Offshore Oil Corp – three Chinese oil companies bidding for an Iraq license – lack Shell’s expertise in the development of vast oil fields. The companies are intent on expanding internationally, but their relatively late entry into the international oil business has prevented them from bidding for bigger projects, such as the Iraqi fields.

Shell meanwhile has stated its interest in entering China’s fuel retail market and its refining industry.

The Chinese petrochemicals sector continues to grow even as it shrinks in Shell’s core markets of Europe and North America. Shell currently has a fuel marketing joint venture in China with Sinopec. The company also jointly operates the Changbei gas field in northwest China with PetroChina.

A report in the Wall Street Journal cited the Kirkuk oil field in northern Iraq as the site of a potential joint venture between Shell and either PetroChina or Sinopec.

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