The Wall Street Journal: Shell Creates China Oil Venture: Monday 5 September 2005

BEIJING -- A Chinese unit of Royal Dutch Shell PLC has signed an agreement with a Chinese company to set up a joint venture that will explore and develop oil-shale deposits in China's northeastern Jilin province, Shell said.

Shell will own 61% of Jilin Shell Oil Shale Development Co., while Jilin Guangzheng Mineral Development Co. will hold the remaining stake, Shell said in a statement.

"The investment in the field study phase of the [joint venture] will reach $50 million," said Nick Wood, a spokesman for Shell (China) Ltd.

Shell said the two parties will invest a total of $150 million in the joint venture.

The agreement is subject to approval by the Chinese government.

With global oil prices skyrocketing, China -- the world's second-largest oil consumer, after the U.S. -- is looking for new energy resources to ease the country's energy shortages.

Oil shale is a rock containing organic matter that yields petroleum when it is distilled. The process is costly and requires more complicated technology to convert oil shale into oil, compared with conventional oil reserves.

"We believe oil shale has the potential to be another source of energy to help fuel China's fast-growing economy," said Guo Wenxiu, Jilin Guangzheng's chairman, in a statement.

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