AFX Europe (Focus): Shell to finalize oil shale reserves deal with China's Jilin province-official: “China has been a net oil importer since 1993 and is now the world's second-largest oil consumer after the US. Rising crude consumption and depleting domestic reserves have forced the country to turn to alternative resources, such as oil shale, to feed its growing requirement for oil, despite the higher costs involved. (ShellNews.net) 30 Nov 04
Nov 30, 2004
BEIJING (AFX) - Oil giant Royal Dutch/Shell Group will finalize its deal with Jilin province authorities next month to jointly develop oil shale resources in the northeastern Chinese province, a local government official said.
"We have initially agreed to join hands with Shell in tapping oil shale here, and will make a public announcement in December," an official with Jilin's land and resources bureau told XFN-Asia.
"Initially, Shell will provide technologies, equipment and invest 2 bln usd in the venture and we will supply research data and labor," he said, but did not elaborate on the Anglo-Dutch firm's share in the venture.
Shell officials in China declined to comment when contacted by XFN-Asia.
Oil shale is a brittle rock that can be converted into petroleum, and Shell is one of the few companies in the world that can perform the process.
China has the fourth-largest oil shale deposits in the world after the US, Brazil and Russia, while Jilin province, with 17.43 bln tons of proven reserves, accounts for about 56 pct of the country's total.
China has been a net oil importer since 1993 and is now the world's second-largest oil consumer after the US.
Rising crude consumption and depleting domestic reserves have forced the country to turn to alternative resources, such as oil shale, to feed its growing requirement for oil, despite the higher costs involved.
But the Jilin government official insisted that the joint venture with Shell could be "very lucrative", given the size and quality of the reserves.
Oil shale deposits in the province contain mostly premium light crude, which keeps refining costs at a minimum, he said.
The official did not disclose potential output figures, but said annual revenue generated by the project could be four times the contribution by China's largest automaker, First Automobile Works (FAW) Group, which is also located in Jilin. FAW earlier set its 2004 revenue target at 120 bln yuan.
He said China's largest oil producer, China National Petroleum Corp (CNPC), also expressed interest in the project, but was rejected due to its inexperience in handling oil shale reserves.
(1 usd = 8.3 yuan)
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