CBI member, Shell has announced that it has entered into an agreement with China National Offshore Oil Corp. to develop oils fields in the Pearl River basin.
The deal was arranged to coincide with China’s celebration of 40 years since the launch of President Deng Xiaoping’s policy of ‘reform and opening up’ and was inked following President Xi Jinping’s address to the nation.
The agreement covers 64,000 square kilometres in the Pearl River basin, to a depth of 3,000 metres.
Shell will be awarded parcels within the Pearl River basin, which it will then be able to explore in collaboration with CNOOC, Total SA and Chevron Corporation - as well as 6 smaller extraction companies. CNOOC issued a statement shortly after the signing ceremony stating that: “This is one of the real actions China is taking to show the world it’s willing to open business to the whole world […] the agreements will facilitate the establishment of a long term and stable cooperation and share the development opportunities to a certain extent in the Strategic Cooperation Areas.”
The Pearl River basin exploration contract builds on Shell’s existing partnership with CNOOC, and demonstrates that Shell is successfully managing to present itself as a trustworthy and reputable foreign partner to China’s oil & gas SOEs. The latest agreement sees the two companies diversify their engagement and adds oil & gas to their existing portfolio, which centres around petrochemicals production.
The announcement to extend their partnership finishes off a successful year for the joint venture; the CNOOC-Shell Nanhai Petrochemicals Plant opened in May. The site is the largest ethylene complex in China and utilises Shell’s industry-leading proprietary OMEGA, SMPO and polyols technologies. Ethylene is sold to the agricultural sector where it is used as a natural plant hormone to stimulate the ripening of fruit.
Shell and CNOOC hope to start producing 1.2 million tonnes per year of ethylene and deliver an oil output of 2 million barrels per day by 2025.
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