BP, CNPC Sign China Shale Gas PSC

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.

The contract is BP’s first shale gas PSC in China and covers an area of approx. 1,500 sq km. CNPC will be operator for this project.

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 Chinese President Xi Jinping, BP said in a statement Thursday.

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.

“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,” said 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.”

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.