China approves shale deal with Shell

China approved a production sharing contract with Royal Dutch Shell for the Fushun shale gas block in the southwestern province of Sichuan. In line with this, Shell prepares for more drilling activities in the country.

The approval came a year after Shell first signed the contract to develop the shale gas block with the China National Petroleum Corporation (CNPC).

According to Shell, which has committed to allocate a minimum US$1biliion a year exploring China's potentially vast shale gas resource, the deal is the first of its kind to be approved by China, but nevertheless was treated the same way as a conventional natural gas project

International energy firms have expressed concern that Beijing has not yet established the regulatory framework required to develop shale gas, nonetheless, the Fushun approval could signal a way forward.

Shell also said that it was preparing for a “significant drilling season” for shale gas in China this year and in 2014, topping up the 80 shale exploration and appraisal wells drilled by end of 2012.


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