PetroChina picks Chevron for Sichuan gas field

Beijing, Aug 7: PetroChina chose US oil and gas company Chevron Corp to help produce natural gas from a field where nearly four years ago a gas blow-out killed hundreds, the Wall Street Journal reported today.

PetroChina had asked other foreign companies including Norway's Statoil and France's Total to submit bids to develop medium-sized Luojiazhai field in Sichuan province, according to industry officials. To achieve that, technology must be used to extract toxic sulphur contained in the gas.

''PetroChina does not have the technology to tackle a field with such high sulphur content,'' said a PetroChina official familiar with the field's production plans.

A US-based spokesman for Chevron said the company would not provide information about business it may or may not be pursuing.

The Chinese energy company is keen to repair its badly tarnished image after a gas well explosion at the same field claimed 234 lives in December 2003 in one of China's worst industrial disasters. The incident also forced the company's former Chairman Ma Fucai to step down.

PetroChina proved in 2003 about 58 billion cubic metres of gas reserve in the field in the northeastern part of Sichuan, and had planned to build a field with annual production capacity of two billion cubic metres.

The field contains 150 grams of sulphur in one cubic metres of gas, said the PetroChina official. This is extra high sulphur content.

A second PetroChina official said one of these companies would be picked as a partner under a production sharing contract, but declined to elaborate.

China, the world's second-largest oil consumer, has been aggressively boosting natural gas production to combat declining oil reserves.

Unlike its offshore sector, which was open to foreign investors 25 years ago, state oil firms have carefully guarded the onshore oil and gas business because it is seen as being more strategic.

Only a handful of companies such as Shell and Total are operating in China's onshore sector, which is mostly natural gas instead of crude oil.

Reuters >