The two parties have also signed a Zitong PSC Amendment Agreement with China National Petroleum Corporation (CNPC) and Mitsubishi Gas Chemical Company Inc. (MGC) to acknowledge the transfer of interest.
Shell confirmed that the deal has been approved by the Chinese government.
The Zitong tight gas block is an area of 1,001 square kilometres, and lies 20 kilometres to the north of the Jinqiu block in the Sichuan basin in China’s Sichuan province. Shell has 90% of participating interests and MGC 10% during the exploration and development phases. Shell is the operator. The 30-year Zitong PSC expires in 2032.
Lim Haw Kuang, Executive Chairman of Shell Companies in China, said: “We are very happy about this new development with our cooperation with CNPC on the gas front. This is another good step forward for our gas development business in China and we look forward to continued success in operating gas development projects in China.”
Notes to editors
Shell upstream activities in China
Approximately 20 new wells will be completed in 2012. Most of these new wells will be in Sichuan province where Shell works with PetroChina on the Fushun-Yongchuan shale gas block, and Jinqiu and Zitong tight gas blocks.
Shell operates the Jinqiu tight gas block in the Sichuan basin under a 30-year PSC with PetroChina (Shell interest 49%) which expires in 2040. The Jinqiu project is in appraisal period and operating with 5 rigs. Shell is undertaking trial production that will determine commercial viability of the project.
Also in Sichuan, Shell and PetroChina are assessing shale gas opportunities in the Fushun-Yongchuan block. Commercial production will depend on the results of the appraisal evaluation and other factors.
Changbei and New Changbei
In Shaanxi province, Shell operates the Changbei tight-gas field under a PSC with PetroChina, producing 3.3bcm per annum to supply for Beijing and other eastern areas of China.
Shell and CNPC signed a PSC amendment for a new development phase for the Changbei gas field to evaluate and develop untapped area and formation that covered by the PSC, and further develop the already producing main reservoir. This additional development project could increase the current production plateau of 320mmscf/d. The PSC amendment has been approved by the Chinese government.
Shell has entered into two oil and gas PSCs with CNOOC Limited for two Yinggehai blocks off China’s Hainan Island. These PSCs have obtained Chinese government approval, marking Shell’s return to offshore oil and gas development in China. Shell holds a 100% working interest during the exploration phase, which will be reduced to 49% in any potential development phase, with CNOOC as majority partner.
Shell and PetroChina are assessing opportunities in coal bed methane in the Ordos Basin, where Shell has an agreement to evaluate resources in North Shilou.
Hangzhou City Ring
Shell is also a partner in the Hangzhou city ring joint venture that develops, operates and manages a high-pressure natural gas pipeline system.
Shell downstream activities in China
Shell has 15 joint ventures and 9 wholly-owned companies. These various Shell ventures cover about 860 retail fuel stations, 7 lubricant blending plants, 10 bitumen plants, and the Nanhai Petrochemicals complex. Shell’s joint ventures are also operating 240 contract management retail sites.
Spokesperson, Shell Companies in China
Tel: +86 10 65054501 ext 2878
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