BP exits China’s shale gas industry citing tough drilling conditions
Apr 15, 2019 (China Knowledge) - Oil and gas giant BP Plc have announced that it will cease its shale gas drilling and fracking operations in the southwest province of Sichuan, citing reasons such as poor well performance and challenging above-ground conditions as reasons for its exit.
BP will join other international oil and gas giants such as Exxon Mobil and Royal Dutch Shell who have also ceased their fracking operations in China, highlighting the unique challenges of developing shale gas in China.
BP will formally announce its exit after a meeting with local partners China National Petroleum Corp (CNPC) to negotiate its exit terms.
The British company had first entered the Chinese shale gas market through a production sharing contract (PSC) with CNPC for shale gas exploration, development and production in the Neijiang-Dazu block of the Sichuan basin in 2016 before signing a second PSC for shale gas exploration in the Rongchangbei block.
However, the company announced last week that it had faced great challenges in its Sichuan projects due to the complex geology of the region as China’s shale reserves tend to be located much deeper underground in less accessible mountainous regions unlike in the US.
With BP’s exit, China’s shale gas sector will be dominated by its two state giants, CNPC and China Petroleum and Chemical Corp.
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