Companies are looking for official approval for natural gas project

BEIJING - A joint exploration project between China National Petroleum Corp (CNPC) and Paris-based Total SA in the South Sulige gas field is likely to get approval from China's central government soon, said Jacques de Boisseson, general representative of Total in China on Thursday.

Boisseson told China Daily that Total has forwarded its development plan to its partner CNPC and is optimistic about the final result.

Total plans to invest "several billion dollars" into the project in two to three years after it gets approval from the government, he said.

Total, Europe's third largest oil producer, had planned invest 2.1 billion in global exploration in 2011, but Boisseson said "very little" of the budget will be used in China since the company is yet to obtain an exploration contract. "I hope we can sign (for projects) in the months to come," he said.

Covering an area of 2,390 square kilometers, the South Sulige gas block is located in Ordos Basin in the Inner Mongolia autonomous region, which is abundant in natural resources.

Yves-Louis Darricarrere, head of Total's exploration and production, said last June that the company was planning to set up a joint venture with CNPC to explore and develop the Sulige gas field. CNPC will own a 51 percent of the venture, while Total will hold the rest, according to a report in the 21st Century Business Herald.

It reported that the project was still under negotiation at that time, and CNPC would undertake the operator role, while Total would sign a production-sharing contract with CNPC and planned to drill 1,000 development wells in the field.

According to a document on CNPC's website, South Sulige is a "low permeability tight" block, and the two companies will explore the gas reserves in the area in an efficient manner.

CNPC's "engineering design, construction and service" and Total's "technological expertise and working practices" will be applied to the block, the document said.

Apart from Total, CNPC, the country's biggest energy producer by volume, has also teamed up with Royal Dutch Shell and Chevron Corp to explore and develop natural gas in China.

A natural gas project in Changbei in Shaanxi province that was jointly developed by CNPC's listed arm, PetroChina and Shell produced 3.48 billion cubic meters (cu m) natural gas last year.

Total is waiting for the production quota set by the NDRC, the country's top economic planner, for the South Sulige block.

Sulige gas field is among the biggest oil and gas fields in China. Figures from CNPC showed that the natural gas block's proven gas reserve surpasses 534 billion cu m.

China Daily

(China Daily 02/25/2011 page15)