BP signs 2nd shale gas contract with China’s CNPC

BP signs 2nd shale gas contract with China’s CNPC

Oil giant BP (LSE:BP) has announced a second production sharing contract (PSC) for shale gas exploration, development and production with China National Petroleum Corporation (CNPC).

The PSC covers an area of approximately 1,000 km2 at Rong Chang Bei in the Sichuan Basin.

In March 2016, BP and CNPC signed their first shale gas contact on the Neijiang-Dazu block.

Bob Dudley, BP group CEO said: “Combining CNPC’s operational expertise with BP’s technology and experience, we now expect to leverage the synergies between these blocks.

“This new PSC clearly demonstrates our continued commitment to invest in projects in China which will deliver long-term value to BP, to our Chinese partners and, most importantly, to the country.”

The framework deal also covers a possible future fuel retailing venture in China, potential new oil and LNG worldwide trading opportunities, carbon emissions trading and the sharing of knowledge around low carbon energy and management practices.

Wang Yilin, CNPC chairman stated: “CNPC and BP’s existing cooperation covers various areas including upstream and retail business in China, overseas upstream exploration and development and international trading.

“Building upon the framework agreement on strategic cooperation signed last year, the two unconventional resource PSCs signed this year are manifestation of our deepening cooperation. By leveraging the parties’ complementary advantages, CNPC and BP will jointly realise the efficient development of unconventional resources.”

BP’s Energy Outlook (2016 edition) expects that by 2035, shale gas will account for a quarter of the total gas produced worldwide and China will become the world’s biggest contributor in shale gas production growth.