Shell, CNPC to jointly seek shale gas in Sichuan Basin

Energy conglomerate Royal Dutch Shell Plc is committing to a "substantial investment" in exploring for conventional and unconventional gas in China to quench the growing thirst for clean energy in the world's second-largest economy.

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The company will continue its exploration of shale gas in the Sichuan Basin, where it landed the first contract with State-owned oil giant China National Petroleum Corp, Huibert Vigeveno, executive chairman of Shell in China, said on Tuesday.

"We are now in the exploration phase by drilling various wells and testing underground pressure in these areas. Some parts of the projects have moved into the appraisal stage, and it will take time before we determine our next step,"

he told China Daily in Shanghai.

Shell expects to have a thorough knowledge of local geology by the end of 2014 into early next year, when Shell and CNPC will determine in tandem what the next steps are, Vigevino noted.

He did not disclose the amount of the company's investment. But the firm had pledged earlier to spend $1 billion annually in developing the country's vast shale gas reserves.

Vigeveno's words came amid concerns that oil majors in the United States are spinning off shale assets after struggling to profit from the prolific sector and that a similar retreat might occur in China.

But experience drawn from the North American market has helped accelerate drilling in China, making the exploration more efficient and effective, said Matthias Bichsel, Shell's director of projects and technology.

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