Shell signs 30-year natural gas development deal with CNPC

Royal Dutch Shell and China National Petroleum Corp (CNPC), China's largest integrated oil-and-gas company have announced a 30-year deal to jointly develop and produce natural gas in China's Sichuan basin.

The deal announced today by Shell, reveals close ties that the Anglo Dutch major has fostered with China's state-owned oil majors and comes close on the heels of Shell teaming up with PetroChina in sealing the acquisition for Australia's coal seam gas producer Arrow Energy yesterday for A$3.5 billion. (See: Shell, Petro China seal Arrow Energy acquisition with $3.2 billion revised offer)

Under the 30-year production sharing agreement, which requires the approval of the Chinese government, the Netherlands-based Shell and Beijing-based CNPC, China's largest oil and gas producer, would evaluate and potentially develop tight gas reservoirs in an area of approximately 4,000-square-kilometre in the Jinqiu block of central Sichuan Province.

Tight gas is natural gas contained in rocks that must be fractured or broken open before it can flow easily to production wells.

''This is another step forward for Shell's world-wide tight gas strategy, building on our technology and production track record in China and elsewhere,'' said Malcolm Brinded, executive director of Upstream International.

''The agreement will strengthen our partnership with CNPC in developing cleaner energy to meet China's growing needs,'' he added.