Shell plans investment of at least US$ 1 billion a year on shale gas in China

Royal Dutch Shell plans to spend at least US$1 billion a year exploiting China’s potentially vast resources of shale gas in an effort to aggressively expand in the world’s largest energy market. In March, Shell secured China’s first product sharing contract for shale gas, making an early entry that will allow it to be a big beneficiary from the likely boom in shale similar to that which has transformed the U.S. energy market. China is believed to hold the world’s largest reserves of shale gas which can be unlocked from ancient shale rocks by hydraulic fracturing.
Shell’s goal is to build a US$12.6 billion refinery and petrochemical complex in eastern China. This project could become the single largest foreign investment in China. The Anglo-Dutch firm is one of the biggest investors in China’s energy sector but faces strong competition from ExxonMobil, BP, Total and Chevron who all believe that the use of natural gas in China will triple within 10 years. China’s oil demand makes up more than 30% of the total world demand.
CNPC- Shell partnership
Shell has lined up China National Petroleum Corp. (CNPC), the country’s top energy group and parent of PetroChina, as its partner for both shale gas and the Taizhou refinery project. Their joint venture drilled 11 wells last year in Sichuan province, more than any other international firm has done. In this partnership, Shell will use the operational and technological expertise it has gained in developing shale gas in North America, while CNPC holds China’s premium oil and gas acreage. Currently, CNPC, through PetroChina, produces some 60 percent of China’s crude oil and nearly three-quarters of its natural gas. (August 29, 2012)