BP signs second Chinese shale gas contract with CNPC

BP has signed a second production sharing contract (PSC) for shale gas exploration, development and production with China National Petroleum Corporation (CNPC). The PSC, signed July 27, covers an area of approximately 1,000 square kilometers at Rong Chang Bei in the Sichuan Basin. In March 2016, BP and CNPC signed their first shale gas PSC on the adjoining Neijiang-Dazu block. As with the earlier contract, CNPC will operate the Rong Chang Bei PSC.

In addition to unconventional resource exploration and development, the framework agreement covers possible future fuel retailing ventures in China, potential new oil and LNG trading opportunities globally and carbon emissions trading, as well as sharing of knowledge around low carbon energy and management practices.

As the world’s largest developing country, China plays a vital role in the transformation of the global energy mix and aims to increase the proportion of gas in its overall primary energy consumption. As a new strategic focus for China, the exploration, development and production of shale gas is expected to significantly benefit the country’s energy mix in the long term. BP’s Energy Outlook (2016 edition) 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.

"China is important for global energy markets and for all BP’s businesses. With this new PSC sealed, we want to further expand our presence in this vital market," said Edward Yang, BP China President. “The two recently-signed shale gas PSCs not only underline BP’s continued confidence in the Chinese market, but also reaffirm our dedication to support China in unlocking its potential for more sustainable energy development.”

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