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Shell signs exploration pact with Chinese oil majors

25th July 2012

New partnerships showcase Shell’s latest strategy to work with Chinese counterparts both in China and globally

Shell is increasing its presence in China, signing two partnership deals with CNOOC, one to explore for oil and gas in the Yinggehai basin in the South China Sea

Shell has signed three offshore oil and gas pacts with Chinese energy companies as part of plans to ramp up efforts to jointly explore hydrocarbons in both China and West Africa, it emerged on Wednesday.

The oil giant this month signed Production Sharing Contracts (PSCs) with CNOOC, and a PSC amendment with CNPC to develop two offshore blocks in China’s Changbei gas field. It also entered an agreement with CNOOC for its participation in two Shell exploration blocks offshore Gabon, West Africa, it announced on the same day.

According to the terms of the contract, Shell will conduct and cover the costs of 3D seismic data survey and drill exploration wells in the two Chinese blocks during exploration; CNOOC has the right to participate in up to 51 per cent working interest in any commercial discoveries in the blocks.

"We are very pleased to cooperate with Shell again. Shell has rich experience in oil and gas operations, and we look forward to the joint exploration of the great potential in Yinggehai," said CNOOC executive vice president, Zhu Weilin.

The onshore gas PSC amendment with CNPC represents a new phase for the development of the existing Changbei block with 1,692.5 square kilometers in the Ordos Basin, and adds scope to develop additional tight gas sands and further develop the already producing main reservoir, according to a Shell statement.

In Gabon, CNOOC will acquire a 25 per cent participating interest in offshore exploration blocks BC9 and BCD10. CNOOC will reimburse Shell for 25 per cent of certain past exploration costs and carry part of the future exploration costs. Shell will remain operator with 75 per cent interest. The agreement is subject to government approval.

Lim Haw-Kuang, Shell executive chairman in China said: “These new projects in partnership with Chinese companies are the latest showcase of our China strategy to work with our Chinese counterparts both in China and globally to help meet the country's energy needs to fuel its fast growing economy."