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Shell and China’s CNPC sign 30-year gas discovery deal


Royal Dutch Shell has strengthened its ties in China with a 30-year deal to explore for natural gas in the country.

The Anglo-Dutch energy giant will partner China National Petroleum Corporation (CNPC) in the project.

The deal follow’s this week’s joint bid with PetroChina, owned by CNPC, for Australia’s Arrow Energy gas company.

Shell has been expanding its search for gas assets rapidly, and the deal secures the company a strong presence in resource-hungry China.

Under the agreement, which still needs clearance from the Beijing government, Shell and CNPC will initially search for gas in a 4,000 sq km area in the Sichuan province.

“The agreement will strengthen our partnership with CNPC in developing cleaner energy to meet China’s growing needs,” said Malcolm Brinded, Shell’s executive director of upstream operations.

On Monday Shell and PetroChina struck an agreed $3.1bn (£2.1bn) takeover of Arrow Energy, a coal-seam gas company in Australia.

Shell and PetroChina already operate Changbei, a gas field in the Ordos Basin in Shaanxi province, which began commercial production in March 2007 and now supplies 3bn cubic metres per year.

And in January the two companies began assessing a shale gas field in Sichuan.

It is thought that Shell is also considering investing in new oil refineries in China.

“We’re open to other discussions here if that will materialise,” said Shell chief executive Peter Voser at a news conference in Beijing.

China is the world’s second-largest oil and gas consumer after America, and has agreed a string of deals around the world to import resources.


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