Royal Dutch Shell PLC will invest around $1 billion annually in its upstream business in China to tap into the country’s surging natural gas demand, state-run newspaper China Daily reported.
Shell has two gas blocks in southwest Sichuan Province which it operates in partnership with China National Petroleum Corp. The company has drilled 13 out of 21 planned wells in the Jinqiu block and will complete 21 by April. The Jinqiu project achieved first gas production last September and has a daily output of 110,000 cubic meters. Shell is still assessing whether commercial development at the Fushun-Yongchuan block is viable, and drilling at the 15 wells could start shortly.
Shell signed in March the first production-sharing contract with CNPC to explore, develop and produce shale gas at the Fushun-Yongchuan block. Recently, Shell said that it will invest more than $20 billion globally in natural gas projects by 2015.