From: Reuters
Published December 18, 2007 08:44 AM

Chevron and CNPC agree 30-year Sichuan gas deal

By Chen Aizhu

BEIJING (Reuters) - U.S. oil major Chevron Corp and Chinese oil giant CNPC have signed a production sharing contract for the Chuandongbei gas block in Sichuan in southwest China, the firms said on Tuesday.

"The signing of this contract demonstrates our worldwide focus on large-scale exploration and production projects and our long-term strategy to grow our business in China," Chevron Chief Executive Dave O'Reilly said.

CNPC will have 51 percent of the venture and Chevron will operate the project and hold 49 percent. The block has proven reserves of 176 billion cubic metres of high sulphur gas, which will be extracted using Chevron's technology, the firms said.


"CNPC wants to expedite development of the block's gas reserves by fully utilizing Chevron's technology in high sulphur gas... to ease the tight gas supply situation in China," CNPC's general manager Jiang Jiemin said at the signing ceremony.

The firms plan to process the gas at two plants with a total capacity of 740 million cubic feet per day (7.6 billion cubic metres a year), which will boost Chevron's Chinese gas output almost sevenfold.

It said in a statement that in 2006, its Chinese production amounted to 100,000 barrels of oil per day and 54 million cubic feet of gas.

"This partnership is a milestone for future cooperation between CNPC and Chevron," said Chevron's country manager for China, Isikeli Taureka.

"We also plan to undertake a multiphase work program with CNPC's subsidiary PetroChina Southwest Oil and Gas Field Company to evaluate additional reserves in the contract area and commence front end engineering and design work."

Chevron said the Chuandongbei development area covered almost 2,000 square km and had an estimated resource base of 5 trillion cubic feet of gas.

The companies did not disclose the size of the investment.

CNPC, or China National Petroleum Corp, is the parent company of PetroChina <601857.SS><0857.HK>.

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