BP aims for in­volve­ment in shale gas

China Daily (Hong Kong) - - BUSINESS - By LYU CHANG lvchang@chi­nadaily.com.cn

BP Plc wants to work with Chi­nese com­pa­nies to ex­plore the coun­try’s vast re­serves of shale gas, in hopes that the gov­ern­ment will give di­rect ac­cess to more pri­vate en­ter­prises and for­eign com­pa­nies in the sec­tor.

“China is es­ti­mated to have the world’s largest po­ten­tial re­serves of shale gas... It’s an ex­cit­ing mar­ket, but BP’s shale gas de­vel­op­ment has yet to en­ter the com­mer­cial­iza­tion phase,” Chen Lim­ing, pres­i­dent of BP China, said.

“BP has rich ex­plo­ration ex­pe­ri­ence in un­con­ven­tional re­sources in North Amer­ica, so we hope to use that ex­per­tise to join China’s de­vel­op­ment of shale gas.”

But he also noted that China’s shale gas sec­tor is un­likely to du­pli­cate the suc­cess seen in the United States be­cause of dif­fer­ent ge­o­log­i­cal con­di­tions and tech­no­log­i­cal chal­lenges.

“The big­gest chal­lenge fac­ing China’s shale gas de­vel­op­ment is that most of the min­ing rights are held by Sta­te­owned oil gi­ants,” Chen said. “Mean­while, China also needs more pol­icy sup­port, in­clud­ing a pric­ing mech­a­nism for shale gas”, he added.

In its lat­est en­ergy out­look, BP said North­ern Amer­i­can mar­kets would dom­i­nate pro­duc­tion of un­con­ven­tional gas over the next two decades.

China pos­sesses the big­gest shale po­ten­tial out­side the US, rep­re­sent­ing huge op­por­tu­ni­ties for shale de­vel­op­ers.

Chen said BP is also look­ing to sup­ply liq­ue­fied nat­u­ral gas car­goes to the Chi­nese mar­ket, and the com­pany also wants to ex­plore fur­ther co­op­er­a­tion with Chi­nese oil com­pa­nies for on­shore and off­shore ex­plo­ration.

Since 2010, BP has been work­ing with a sub­sidiary of China Petro­chem­i­cal Corp (known as Sinopec) to ex­plore shale gas in the south­west

The big­gest chal­lenge fac­ing China’s shale gas de­vel­op­ment is that most of the min­ing rights are held by State-owned oil gi­ants.” CHEN LIM­ING PRES­I­DENT OF BP CHINA

prov­ince of Guizhou, the Peo­ple’s Daily has re­ported.

As part of its drive to re­duce re­liance on coal and cut air pol­lu­tion, China is sup­port­ing the shale gas in­dus­try. Ex­perts be­lieve that shale gas rep­re­sents a break­through in the re­form of the na­tion’s en­ergy pic­ture.

A planned third round of shale gas bid­ding is likely to start soon, a source at the Min­istry of Land and Re­sources said. The source added that a draft of shale gas re­serve eval­u­a­tion stan­dards is nearly com­pleted and will be re­leased within weeks.

So far, the min­istry has held two rounds of open ten­ders for shale gas, mark­ing the start of com­mer­cial ex­plo­ration. But ex­plo­ration is tak­ing longer than ex­pected.

Ac­cord­ing to the China Ge­o­log­i­cal Sur­vey, the win­ning com­pa­nies’ ac­tual ex­plo­ration work on ar­eas won in the sec­ond round of bid­ding, held in 2012, has been much less than ex­pected. Only 46 per­cent of the area awarded has been ex­plored so far.

Two Chi­nese pri­vate com­pa­nies, along with 14 Sta­te­owned en­ter­prises, won ar­eas in the sec­ond round of bid­ding for ex­plo­ration rights.

In first round, held in 2011, only China Na­tional Petroleum Corp and Henan Pro­vin­cial Coal Seam Gas De­vel­op­ment and Uti­liza­tion Co Ltd en­tered suc­cess­ful bids.

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