PetroChina,
China's largest oil and gas producer, and Royal Dutch/Shell Group,
Europe's second-largest oil company, announced Tuesday the start of
their partnership in developing the Changbei natural gas field in
northwest China's Ordos Basin.
Shell will operate the project, and yesterday the two companies
signed three drilling contracts and two letters of intent for
engineering, procurement and construction contracts.
It marks the debut of the largest onshore exploration and
production project between Chinese and foreign companies. The
scheme is expected to start delivering 1.5 billion cubic meters of
natural gas a year to consumers in Beijing, Shandong,
Hebei
and Tianjin
by 2007.
Annual gas delivery capacity is expected to double to 3 billion
cubic meters by 2008, said company sources. According to a Reuters
report, the Changbei gas field holds 70 billion cubic meters of gas
reserves.
Costing US$600 million, the project includes the construction of
central processing facilities and inter-field pipelines as well as
the drilling of about 50 wells within 10 years.
Over the 20 years of the project's lifetime, Shell will be
entitled to own half of the gas production, according to the
agreement with PetroChina.
Shell has shown an intense interest in developing China's gas
sector, despite deciding not to invest in PetroChina's West-to-East
gas pipeline megaproject.
It recently formed a US$91 million joint venture with Hangzhou
Gas (Group) to operate and manage a high-pressure gas pipeline
system in Hangzhou, capital of east China's Zhejiang
Province, possibly paving the way for other investments,
including liquefied natural gas terminals, said analysts.
(China Daily May 18, 2005)