PetroChina taps Chevron for Sichuan gas field development

PUBLISHED : Wednesday, 08 August, 2007, 12:00am
UPDATED : Wednesday, 08 August, 2007, 12:00am

PetroChina, the nation's largest oil and gas producer, will partner United States-based energy major Chevron Corp to develop high-sulphur gas fields in northeastern Sichuan province, a project that has proved difficult and accident-prone in the past.

A source close to the companies said a production-sharing contract had been signed, under which PetroChina and Chevron will share development costs and output from the fields on a 51-49 percentage basis. PetroChina would have the larger share.

PetroChina and Chevron declined to comment or provide details about the project.

China Securities Journal quoted an industry official as saying that PetroChina outbid Norway's Statoil, France's Total and Anglo-Dutch oil firm Royal Dutch Shell in getting the right to develop the field.

The field has 58.1 billion cubic metres of proven reserves, with 7.13 per cent to 10.49 per cent sulphur content, it added. Gas fields with over 2 per cent sulphur content are classified as high sulphur.

High-sulphur fields are prone to accidents if proper technology is not deployed. PetroChina held up a plan to develop the Luojiazhai field in the area after a hydrogen-sulphide leak in January last year from a well resulted in the evacuation of 15,000 people, industry magazine Upstream said.

Some 243 people were killed in an explosion of a gas well in nearby Chongqing in December 2003.

PetroChina originally only put the Luojiazhai gas field in northeast Sichuan on tender for foreign participation, but found no takers due to safety concerns as the field was located in a densely populated area, Upstream said. The magazine said this prompted the company to seek a wider production area, including the Tieshanpo and Dukouhe gas fields.

PetroChina does not normally invite foreign firms to participate in oil and gas projects, but would like to tap overseas expertise in anti-corrosion technology, sour gas field drilling, production, transportation and purification in this difficult region.

It has co-operated with foreign firms on two other occasions in Inner Mongolia - once with Total and another with Royal Dutch Shell.