PetroChina participates in the approval of Shell Canada's unconventional natural gas project

The National Development and Reform Commission announced yesterday that it has approved China Petroleum and Natural Gas Exploration and Development Corporation, a subsidiary of China National Petroleum Corporation, to acquire the 20% equity interest in Shell in the Groundbirch block of British Columbia, Western Canada, and to participate in a downstream natural gas liquefaction plant cooperation project. At the same time, five other overseas acquisitions were announced and approved, indicating that the pace of “going out” of Chinese oil companies has continued to accelerate.

Just a week ago, there were rumors that overseas that PetroChina had signed an agreement to buy a 20% stake in a shale gas project in Canada from Shell. A CNPC spokesman later confirmed that the deal was to purchase Shell's Grounbirch assets in Canada and the agreement was completed on February 1. The spokesperson also stated that this is the latest development made by Chinese oil companies in a series of investments in North American shale gas and oil sand resources.

According to market analysis, CNPC plans to spend more than US$1 billion to buy shares in Groundbirch, Canada.

In June last year, Shell signed a global cooperation agreement with CNPC and a shareholder agreement to establish a joint venture in Jianjing. Shell Chief Executive Fu Saisai said at the time that Shell and PetroChina will develop natural gas resources with innovative and cost-competitive technologies. The industry generally believes that the joint venture is mainly for the preparation of unconventional natural gas. Large-scale commercial exploitation of unconventional natural gas such as tight gas, shale gas, and coalbed methane often lasts for many years, drilling hundreds of wells per year.

The National Development and Reform Commission also announced several other important overseas acquisitions yesterday, including Sinopec Group’s Sinopec International Petroleum Exploration and Development Co., Ltd.’s acquisition of Canada’s Sunlight Energy Company’s project and acquisition of the Shell Cameroon’s assets project; CNPC’s investment in China’s oil and gas exploration and development company Exploration and Development Project in Afghanistan's Amu Darya Basin; China National Offshore Oil International Co., Ltd., a subsidiary of CNOOC, acquired 100% equity interest in OPTI and acquired a 33.3% interest in Blocks 1, 2, and 3A in Uganda held by Tulo Petroleum project.

In addition, China National Petroleum Corporation and HAFNIUM Co., Ltd. jointly developed the overall development plan for the Xinjiang Shallow 5 Well Area, cooperated with Shengye Oil Group Co., Ltd. to develop the overall development plan for the Dina 1 gas field in the Tarim Basin, and established the Yongzhi-Baosteel natural gas pipeline project. CNOOC's construction of Hainan LNG station line project has also been approved at the same time.

“Overseas M&A cases appear to be centered on the fact that the financial crisis has led to the emergence of liquidity problems in some resource companies in the world and thus has focused on seeking liquidity. However, Chinese companies should still carefully select quality assets among them.” Zhou Fengqi, former director of the Energy Research Institute of the National Development and Reform Commission, accepts it. Shanghai Securities News said in an interview.