BP and CNPC sign shale gas production deal

BP and China National Petroleum Corporation (CNPC) have signed a production sharing contract (PSC) for shale gas exploration, development and production in the Neijiang-Dazu block in the Sichuan Basin, China. The contract is BP’s first shale gas PSC in China and covers an area of approximately 1,500 sq km. CNPC will be operator for the project.

The PSC is the first achievement from BP and CNPC’s framework agreement on strategic cooperation that was signed last October during the visit to the UK of President of The People’s Republic of China, Xi Jinping. In addition to unconventional resources, the framework agreement covers possible future fuel retailing ventures in China, exploration of oil and LNG trading opportunities globally, and carbon emissions trading as well as sharing of knowledge around low carbon energy and management practices.

CNPC Chairman Wang commented: ‘By leveraging the parties’ complementary advantages, CNPC and BP will jointly realise the efficient development of unconventional resources.’

BP’s Energy Outlook 2016 expects that by 2035 shale gas will account for a quarter of the total gas produced globally and China will become the world’s largest contributor to growth in shale gas production.

‘As a new strategic industry for China, the exploration, development and production of shale gas will significantly benefit China’s energy mix in the long run,’ said Edward Yang, BP China President. ‘Through this PSC, BP once again clearly reaffirms our commitment to being one of China’s preferred energy partners to support the country in developing cleaner energy for a greener future.’

BP has also signed a framework agreement with Kuwait Petroleum Corporation (KPC) to explore possible joint opportunities for investment and cooperation in oil and gas projects in Kuwait and globally. In addition to enhancing oil and gas recovery from Kuwait’s existing resource base, the agreement also includes the intention to study opportunities for joint investment in future oil and gas exploration. Other elements of the agreement cover possible future oil and gas trading deals including LNG trading and related ventures.