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Shell deal forges new links with China

Times Online

May 19, 2010

China’s biggest energy company has agreed to take a stake in Royal Dutch Shell’s oil and gas unit in Syria in a deal estimated to be worth $1.5 billion (£1 billion).

China National Petroleum Corporation (CNPC) has acquired a 35 per cent interest in Syria Shell Petroleum Development.

Shell has been eager to foster closer links with China, the world’s second-biggest oil consumer after America, and to team up in exploring and producing in the Middle East.

Shell signed a 30-year deal with CNPC on Sunday for joint gas exploration and production in Qatar.

A statement on Shell’s website said: “The agreement strengthens the partnership between Shell and CNPC. Both parties will look to continue growing and investing in attractive opportunities in Syria’s upstream industry.”

The stake could be worth about $1.5 billion if CNPC gets a third of Shell’s 23,000 barrel-a-day output over 20 years, said Gordon Kwan, head of energy research at Mirae Asset Securities.

“This is not a lot of oil and gas for a company like CNPC, which is producing about 2.5 million barrels a day,” Mr Kwan said. “It’s a chance to further develop co-operation with Shell in ventures overseas and to also increase its presence in Syria and the Middle East.”

Chinese companies spent a record $32 billion on mining and energy acquisitions last year, securing oilfields, coal and metal mines in Africa, Asia and Australia to meet demand in the world’s fastest-growing major economy.


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