PetroChina inks Qatar LNG deal

By Wan Zhihong (China Daily)
Updated: 2010-05-18 09:20
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PetroChina inks Qatar LNG deal

A PetroChina employee inspects natural gas purification equipment in Suining, Sichuan province. China will need 200 billion cubic meters of natural gas in 2015. [Zhong Min / for China Daily] 

BEIJING - PetroChina Co, the country's largest oil and gas producer, has signed an agreement with Royal Dutch Shell and Qatar Petroleum to explore for natural gas in the Middle Eastern country, part of bid by domestic companies to expand to their gas portfolio.

Under a 30-year exploration and production sharing agreement, the partners will jointly explore for natural gas in an area covering 8,089 square kilometers. Shell will hold a 75 percent stake in the project and PetroChina the remaining 25 percent, PetroChina said in a statement.

Shell and PetroChina will produce natural gas under Qatar Petroleum's supervision. According to the agreement the Qatari company will be the purchaser of any gas produced, said the statement.

Qatar Deputy Prime Minister and Minister of Energy and Industry Abdulla bin Hamad Al-Attiyah said that Shell is already a major investor in the development of Qatar's proven gas resources. The country welcomes PetroChina, a new investor in Qatar, he said.

Shell is developing significant volumes of Qatar's proven gas resources through its two giant projects with Qatar Petroleum, one gas-to-liquids project and one liquefied natural gas (LNG) project.

Zhao Dong, chief financial officer of PetroChina International Investment Co Ltd, said: "China is an important downstream market and PetroChina is keen to build upstream partnerships with major resource holders like Qatar."

Analysts said that the deal is in line with China's move to use more natural gas, a clean energy, for the country's energy consumption. China would need 200 billion cubic meters of natural gas in 2015, doubling the 2008 level, said Liu Xiaoli, a senior researcher at the energy research institute under the National Development and Reform Commission.

The nation's annual demand for clean energy will grow to 300 billion cu m by 2020, according to Liu.

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Statistics showed that between 2000 and 2008, China's annual consumption of natural gas grew 16.2 percent on average, 9.7 percentage points higher than the annual growth rate for oil consumption, or 6.6 percentage points higher than the annual growth rate for coal consumption.

"Natural gas will play a vital role in China's energy industry in the future," said Han Xiaoping, chief information officer of domestic energy portal, adding that China should make additional reforms in the sector for faster development.

China is now increasing its imports of natural gas both onshore and offshore. Fu Chengyu, president of China National Offshore Oil Corp (Cnooc) said earlier that the company had signed long-term supply contracts with domestic and overseas partners for 320 million tons of LNG, equivalent to importing 22 billion cubic meters of LNG annually for 25 years.

The LNG business plays an important role in Cnooc's strategy of developing clean, low-carbon energy, Fu added.

The company last year signed an agreement with Qatargas to buy more LNG from the country to meet rising domestic demand.