Statoil Nears Deal in China
Statoil of Norway is closing in on a deal to explore shale gas reserves in China in spite of tensions between Beijing and Oslo over the award of the Nobel Peace Prize to a Chinese dissident.
Helge Lund, chief executive, indicated that last month’s decision by the Norwegian Nobel committee to honour Liu Xiaobo, the jailed human rights activist, had not derailed the group’s ambitions.
“We are in the process of entering into an agreement to look at [shale gas] opportunities in China,” he told the Financial Times without giving further details.
Statoil is part of a clutch of western energy groups seeking access to Chinese shale gas reserves as the country tries to emulate the US success in extracting gas from tightly-layered shale rock.
By some estimates, shale gas has more than tripled the lifespan of US gas reserves to more than 100 years and experts say there is similar potential in China.
Chinese energy companies are looking for help from western counterparts to develop the resources. Sinopec is in talks with BP and Chevron about potential co-operation and Royal Dutch Shell has a deal with PetroChina to develop shale gas in southwestern China.
Statoil could be an attractive partner because of its experience developing the big Marcellus Shale formation in the US north-east.
The Norwegian group stepped up its investment in the so-called unconventional gas sector last month when it teamed up with Talisman Energy of Canada in a $1.3bn deal to buy a swathe of the Eagle Ford shale formation in Texas.
Statoil is exploring shale opportunities in South Africa as part of broader efforts to reduce dependence on its declining North Sea reserves.
The group has made no secret of its hopes to break into China, but those ambitions have been called into question since the Nobel decision ignited a diplomatic feud.
As Norway’s biggest company, two-thirds owned by the Norwegian government, Statoil would be a prime target for any retaliatory Chinese measures.
Mr Lund declined to comment on the Nobel dispute but insisted Statoil was “continuing to work with Chinese companies in China”.
The group has a deal with Sinopec to explore offshore oil prospects in the South China Sea and with Sino-chem to co-operate in Brazil and elsewhere.
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