Chinas first large-scale shale gas field found in Chongqing

State-owned Chinese oil and gas giant, Sinopec, announced Monday that its discovered a major shale gas field near Southwest China¡¯s Chongqing. The Fu-Ling field has estimated reserves of 2.1 trillion cubic meters. It's also the first large-scale discovery of its kind in China.


The discovery in Chongqing¡¯s Fuling district means that China can enter into large-scale commercial development of shale gas much earlier than anticipated. Sinopec¡¯s Chairman -- Fu Chengyu -- says 10 years can now be cut off from China¡¯s planned development time for shale gas energy.


"Our Fuling project, which will ultimately produce 10 billion cubic meters a year by 2017, will build shale gas capacity to 5 billion cubic meters a year by 2015." Fu Chenyu said.


The discovery of the Fuling field means China¡¯s official target for annual shale gas production, 6.5 billion cubic meters a year, will be easily surpassed. But Sinopec may be faced with a cash squeeze as it looks to develop the field. That¡¯s because SinoPec¡¯s major competitor, PetroChina, reportedly will seek private investment in order to help it get into shale gas production.


Sinopec and state-owned PetroChina both cut their capital expenditures for 2014 from a year ago but analysts say Sinopec may have less flexibility on spending than its competitor. The reason for that is that PetroChina has a stronger balance sheet while Sinopec faces rising refining costs and weaker income from oil and gas production.

( Mar 25, 2014)