BEIJING - Royal Dutch Shell PLC will invest around $1 billion annually in its upstream business in China to tap into the country's surging natural gas demand, state-run newspaper China Daily reported Wednesday, citing the oil and gas giant's chief executive officer.
"There's huge potential to come in terms of the natural gas market in China," Peter Voser was quoted by the newspaper as saying.
Shell currently has two gas blocks in southwest Sichuan Province, which it operates in partnership with China National Petroleum Corporation.
The company has drilled 13 out of 21 planned wells in the Jinqiu block and will complete 21 by April 2013, the newspaper said. The Jinqiu project achieved first gas production last September and currently has a daily output of 110,000 cubic meters. Meanwhile, Shell is still assessing whether commercial development at the Fushun-Yongchuan block is viable, and drilling at the 15 wells could start by the end of 2012 or early next year, the report said, without elaborating.
Shell signed in March the first production-sharing contract with CNPC to explore, develop and produce shale gas at the Fushun-Yongchuan block.
Last week, Shell said that it will invest more than $20 billion globally in natural gas projects by 2015.
Annual natural gas consumption in China is expected to rise to 230 billion cubic meters by 2015, while supply will likely be above 260 billion cubic meters, said Liu Tienan, the head of National Energy Administration, in late October.