UK Energy Giant BP Seals First Shale Gas Production Sharing Deal in China

UK energy giant 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 Chinese Sichuan Basin, the British company announced Thursday.

MOSCOW (Sputnik) – The deal becomes BP’s first shale gas contract in China that will cover an area of about 1,500 square kilometers (579 square miles), the UK oil and gas company said, adding that the project would be operated by CNPC.

"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. 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," BP Group Chief Executive Bob Dudley was quoted as saying in a press release.

BP is among the leading foreign investors in the Chinese oil and gas sector. Its activities in China comprise such areas as exploration and development, petrochemicals manufacturing and marketing, aviation fuel supply, oil products retailing, lubricants, oil and gas supply and trading, according to the company’s website.

BP’s 2016 Energy Outlook forecasts that shale gas will make up a quarter of the total gas produced in the world by 2035 and China will contribute most to the shale gas production growth.