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Asia: Shell signs pact with China Xinjiang government on CBM development

https://www.chemnet.com   Mar 10,2011 Platts
Shell has signed a framework agreement with the government of the Xinjiang autonomous region in northwest China to jointly explore and develop coalbed methane other other unconventional gas resources in the region, according to a statement published Wednesday by the local government.

The agreement was signed on February 28 by Vice Chairman Kurax Mahsut of the Xinjiang government and chairman of Shell's companies in China, Lim Haw Kuang, the statement said.

"We can confirm that Shell has signed a Strategic Cooperation Framework Agreement with the government of Xinjiang, China to explore energy cooperation opportunities," Li Lusha, a spokeswoman for Shell in Beijing, said in an email reply.

The announcement, however, did not elaborate on details on actual exploration sites or capital investment to be injected by Shell in the exploration and development.

"We have no further information to disclose at this time," Li said.

According to an estimate by energy consultant Wood Mackenzie, CBM is expected to become the second-largest domestic unconventional gas supply after shale gas, and account for 14% of total domestic gas supply by 2030.

Still, development of CBM resources has been slow to take off in China.

WoodMac believes that CBM development has been impeded by a lack of pipeline access for CBM operators and the need for large scale investments to accelerate CBM exploration and prove up reserves.

In addition, the need for more advanced basin-specific technology to address unique geological conditions in China has also deterred the progress of CBM development in the country, WoodMac said.

In early December 2010, China's Ministry of Commerce announced that three more state-owned companies -- China National Petroleum Corp., Sinopec and Henan Provincial Coal Seam Gas Development & Utilization Co. -- would be allowed to cooperate with foreign companies in developing the country's coalbed methane resources.

Prior to that, China United Coal Bed Methane Co. was the sole company tasked to develop CBM projects with foreign companies.

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