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. Witnessed by BP Group Chief Executive Bob Dudley and CNPC Chairman Wang Yilin, the contract is BP’s first shale gas PSC in China and covers an area of approximately 1,500 square kilometres. CNPC will be operator for the project.

“We are pleased to reach this significant milestone as part of our strategic partnership with CNPC, building on our successful cooperation in and outside of China,” Dudley says. “We are looking forward to working together with CNPC on technology, operational and subsurface techniques in unconventional resources. We will bring our worldwide experience to our first unconventional gas project in onshore China with CNPC. We will combine this with CNPC’s knowledge and experience to bring gas to China’s growing clean energy market. China continues to be an important part of BP’s portfolio.”

This 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, Mr. 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 comments, “CNPC and BP’s existing cooperation covers various areas including retail business in China, overseas upstream exploration and development and international trading. Building upon the framework agreement on strategic cooperation signed last year, this unconventional resource PSC is a manifestation of our deepening cooperation. By leveraging the parties’ complementary advantages, CNPC and BP will jointly realize 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 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 a long run,” says 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.”

Tags: BP, China National Petroleum Corporation