Shell to invest $1bn a year in China shale gas strategy

By AGENCIES

ROYAL Dutch Shell plans to spend at least $1bn (£633m) a year exploiting China's potentially vast resources of shale gas, the firm's top China executive has said, in an aggressive strategy to expand in the world's biggest energy market.

Shell in March secured China's first product sharing contract for shale gas, hoping that getting in early will allow it to be a big beneficiary from the sort of boom in shale that has transformed the US energy market.

Asked if the firm remained committed to a plan to invest $1bn a year in China's shale gas over the coming few years, Lim Haw Kuang said: "Yes, yes and yes."

"If there has been an adjustment to that pledge, it could only be an upward revision," added Lim, a Malaysian national and Shell veteran of 34 years.China is estimated to hold the world's largest reserves of the unconventional gas – which can be unlocked from ancient shale rocks by hydraulic fracturing, or "fracking", a technology developed in recent years in North America.

Shell is also aiming to build a $12.6bn refinery and petrochemical complex in eastern China, a project that could become the single largest foreign investment in China.

The Anglo-Dutch firm is one of the biggest investors in China's energy sector but faces strong competition.

Exxon Mobil, BP, Total and Chevron are also trying to get a bigger slice of the Chinese market, where use of natural gas is set to triple this decade and growth in oil demand makes up more than a third of the world total.

Shell has lined up China National Petroleum Corp, the country's top energy group and parent of PetroChina, as its partner for both shale gas and the Taizhou refinery project (The Guardian).