It should come as no surprise that Chinese exploration and production company, Sinopec Group recently announced that its fully-owned subsidiary Sinopec International Petroleum Exploration and Production Corporation has signed an agreement with America’s Devon Energy Corp, buying one third of the equity of Devon’s 5 shale gas assets in America to the tune of $2.2 billion.
This marks Sinopec’s first foray into America’s shale gas resources and signals what many believe is a new trend in Chinese investment in the American shale market. It is estimated that by 2015, America’s production of shale gas will reach 260 to 280 billion cubic meters, accounting for one third of total natural gas production.
China has concurrently ramped up exploration and production in their own country and Chen Xianda, secretary general of China Mining Association, says that China’s geological conditions are similar to those of America, and initial prospection shows that China has a reserve of about 31,000 billion cubic meters of recoverable shale gas, about the same volume of conventional natural gas reserves.
While the strategic investigation, exploration and development of shale gas resource in China is still in its infancy, the level of industry development lags behind developed countries. Core technologies in such aspects such as shale gas resource assessment and development have not yet been achieved, making it harder for large-scale exploitation.