BP is set to become the latest international major to quit drilling for shale gas in China because of poor exploration drilling results so far, Reuters reported on Thursday, citing three sources with knowledge of the plans.
Back in 2016, BP and China National Petroleum Corporation (CNPC) signed a production sharing contract (PSC) for shale gas exploration, development, and production in the Neijiang-Dazu block in the Sichuan Basin in southwestern China. Later in 2016, BP signed a second PSC deal with CNPC for shale gas exploration at Rong Chang Bei in the Sichuan Basin.
However, poor results from shale gas drilling are now making BP withdraw from the projects, according to Reuters sources.
BP joins other international oil and gas majors such as Shell, Eni, Exxon, and ConocoPhillips that have stopped drilling for shale gas in China, leaving the country’s shale gas sector predominantly in the hands of the large Chinese state-held energy companies.
BP’s shale gas drilling projects face “great challenges” due to the complex geological structure in the area, BP’s chief executive Bob Dudley said at an energy conference in Shanghai last week, as carried by Reuters.
China, for its part, aims to develop its unconventional resources as its appetite for crude oil and natural gas continues to rise, while current domestic production can’t meet growing demand. Over the past year, China’s biggest energy producers have started to tap more tight oil and gas wells, aiming to increase domestic oil and natural gas production at the world’s largest crude oil importer.
While majors are quitting China’s shale gas, one of them is venturing into the shale oil business. Shell has just signed an agreement with China’s Sinopec to jointly study the potential development of shale oil in eastern China—one of the few international majors venturing into the potentially vast but underexplored and underdeveloped Chinese shale oil resources.
By Tsvetana Paraskova for Oilprice.com
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