Royal Dutch Shell and China National Petroleum Corporation to Partner on Gas Project

Earlier this month, Royal Dutch Shell, headquartered in London, and a China energy firm announced a deal involving a business relationship in Australia. Last week Royal Dutch Shell and the China National Petroleum Corporation (CNPC) announced plans to develop a similar project in China. The aim of the deal announced last week is to partner in the development of gas located in Sichuan province.

According to Shell:

"The companies have submitted a production sharing contract to the Chinese central government for approval. Under the 30-year contract, Shell and CNPC would appraise and potentially develop tight gas (basin-centred gas) reservoirs in an area of approximately 4,000 square kilometres in the Jinqiu block of central Sichuan Province."

Click here to see a map of the specific location in China.

Malcolm Brinded, executive director of upstream international at Shell, said, "The agreement will strengthen our partnership with CNPC in developing cleaner energy to meet China's growing needs."

In reporting on the announcement, the Financial Times ("Shell Joins CNPC for Project," March 23, 2010) put the deal into greater context: "All of the world's largest energy companies are seeking partnerships with China's state-owned petrochemical groups, particularly in Africa, Latin America, and the Middle East where China is viewed more favourably than in some western countries."

In short, "the beat goes on"...western energy giants, particularly in Europe, are looking for ways to partner with China-based firms.