China Petroleum to Focus on Growth by Shale Gas
China Petroleum & Chemical Corp., Asia’s biggest refiner, plans to partner with overseas entities to accelerate its search for shale gas resources as part of its drive to shift focus from unprofitable crude processing.
Results of 20 experimental shale-gas wells drilled by subsidiary Sinopec in China show “better than expected” results, prompting higher investments over the next decade.
“Future growth will mainly come from unconventional gas,” said Sinopec chairman Fu Chengyu. “China lags behind western oil companies in technology and experience. Instead of waiting for our technologies to mature, we can hire them to work for us.”
Overseas explorers, barred from bidding in Chinese auctions of shale areas, are in talks to forge local ventures.
Chevron Corp. and BP Plc are negotiating with Sinopec and its parent, China Petrochemical Corp while Norway’s Statoil ASA is looking to buy stakes in shale-gas assets in the country. "Unconventional will surpass conventional gas in China,” Fu predicted.
The Asian country which currently doesn’t produce any shale gas, is estimated to hold 1,275 trillion cubic feet of gas, or 12 times the country’s conventional natural gas deposits, the agency quoted the U.S. Energy Information Administration data as saying. In fact, China’s “technically recoverable” reserves are almost 50 percent more than the 862 trillion cubic feet held by the U.S. and the nation may see its annual shale gas output touching 20 billion cubic metres by 2020, a researcher in Beijing predicted.
Sinopec joins rival PetroChina Co.’s parent and CNOOC Ltd. to seek technology through partnerships.
Another reason to look for modern Western technology was the 11-month period consumed by China National Petroleum Corp., PetroChina’s parent, to complete the country's first shell well, making it to firm up a deal with Royal Dutch Shell Plc in June to improve its drilling efficiency.
“It’s going to take two to four years before they know how to do shale gas, or to find out if there’s anything useful there,” said Brynjar Eirik Bustnes, a Hong Kong-based analyst at JPMorgan Chase & Co.
“Beyond 2015, shale gas may become a growth driver for Sinopec.”
Source: Xinhua