Petroleum Economist Maps, Books and Reports 2 | Page 5
Shale gas
covering the northern basins, but
the timeline is unclear for now.
Considering the lack of success so
far, Song expects the government will
encourage further foreign participation, most likely through joint ventures
with local companies.
Foreign participation
For now though, Song says it’s best for
investors to explore opportunities with
the NOCs.
Tony Regan, an Asian-gas specialist
at Singapore-based consultancy
Tri-Zen, agrees, saying that it would be
extremely frustrating for investors to
hook up with the inexperienced winners
of the second acreage release, which
covered some 20,000 square kms.
Almost all foreign involvement in
China’s shale-gas development starts
with a joint study, followed by multiphase pilot programmes rather than a
direct PSC.
The international oil companies,
eager to get a foothold in the nascent
sector, are busy tying up with the
NOCs.
Shell and CNPC were granted
China’s first foreign-invested production sharing contract (PSC) for shale
gas earlier this year at the FushunYongchuan Block. The move forms
part of Shell’s $1 billion per year
investment programme in China’s
unconventional space.
The Anglo-Dutch supermajor is
also drilling wells with Sinopec to
test the shale potential in central
China, where scant exploration has
been done.
The pair is carrying out a joint evaluation at the Xiang E Xi (XEX) block,
at the junction of central Hunan,
Hubei and Jiangxi provinces in east
central China. Results from hydraulic
fracturing at the first well, Liye-1, were
disappointing.
A second well, Engye-1, is being
drilled and a third one is also planned.
ExxonMobil, Eni, Chevron, Hess, and
Total are all carrying out joint study
agreements with CNPC or Sinopec.
Chevron is drilling at Sinopec’s
Qiannan shale-gas block.
Foreign independents are eager
www.petroleum-economist.com
Figure 1: China shale gas production (bcm)
billion cm
150
North China Shale
Tarim Shale
Songliao Shale
90
Ordos Shale
Junggar Shale
120
Sichuan Shale
60
30
0
2012
2014
2016
2018
2020
2022
2024
2026
2028
2030
Source: Wood Mackenzie
to join the party too. Leading service
providers, including Schlumberger and
Halliburton, are also forming strategic
partnerships with either local governments or NOCs.
The government recognises it
needs more foreign participation and
is encouraging the joint venture model
for Sino-foreign coo \