PetroChina joins Shell, Hess for shale oil exploration

PetroChina (PTR.NYSE, 601857.SH, 0857.HKG) is in talks with Royal Dutch Shell (RDS.A.NYSE, RDSA.LSE) and Hess Corp (HES.NYSE) to explore shale oil in Xinjiang’s Santanghu Basin, Reuters reported, citing parent China National Petroleum Corp in a company-owned newspaper. PetroChina has already drilled 35 wells in the basin, but low oil reserve content and immature domestic technology continue to curb output, the company said. The partnership, which will require approval by the National Development and Reform Commission, is the latest in a series of unconventional oil and gas explorations in which Chinese firms are looking to acquire technology and expertise, and foreign firms gain access to a large and restricted energy market. Shell signed a production sharing contract with CNPC in March for a shale gas block in Sichuan, the first such deal in China, while Hess is researching shale gas and oil potential with Sinopec Corp (SHI.NYSE, 600028.SH, 0338.HKG) in eastern China’s Shengli oilfield.