China signs $50 billion U.S. dollars in oil projects this month

Test run of China-Russia oil pipeline successful



Test run of China-Russia oil pipeline successful
11:25, November 04, 2010


Photo taken on Nov. 3, 2010 shows crude oil discharge trestle and storage zone for the last terminal of the China-Russia crude oil pipeline in Daqing, northeast China's Heilongjiang Province. The test run of the China-Russia crude oil pipeline has been successful on Tuesday. The first shipment, after traveling 13 hours from Russia's Dzhalinda, entered oil storage in Mohe, the first of terminal of the pipeline in China, at around 8 a.m. Tuesday. Monthly crude shipments through the China-Russia pipeline are forecast to range from 250,000 to 300,000 tons during the test run period from November to December. The pipeline, which is designed to transport 150 million tons of crude oil per year from 2011 to 2030, will enter full operation in Jan. 2011. (Xinhua/Xia Shigang)


A technician records data at the oil storage facility in Mohe, northeast China's Heilongjiang Province, on Nov. 1, 2010. (Xinhua/Jin Jiangshan)


Photo taken on Nov. 3, 2010 shows the crude-oil storage zone for the last terminal of the China-Russia crude oil pipeline in Daqing, northeast China's Heilongjiang Province. (Xinhua/Jin Jiangshan)


Workers show the first bottle of crude oil transported through the China-Russia crude oil pipeline at the oil storage facility in Mohe, northeast China's Heilongjiang Province, on Nov. 2, 2010. (Xinhua/Jin Jiangshan)


Chinese and Russian technicians hold discussions at the oil storage facility in Mohe, northeast China's Heilongjiang Province, on Nov. 1, 2010. (Xinhua/Jin Jiangshan)

China's 1st LNG cold energy Air Separation Unit facility begins operation in Putian


Air Separation Units: The atmosphere consists of approximately 78% nitrogen (N2), 21% oxygen (O2), and 1% argon (Ar). Several industries require pure nitrogen, oxygen, or argon for their production processes. Cryogenic Air Separation is the process that enables the separation of these compounds.

It filters dust and moisture from the air. Several compressor stages and heat-exchangers increase the pressure of the filtered air; resulting in liquid air. After the last stage, the liquid air moves to a distillation column. Liquid nitrogen exits at the top of the distillation column, while the liquid oxygen and argon come out at the bottom. The now maximally-compacted substances may then be transported to the customer. If the customer wishes to evaporate the substances, for example into gas required for a production process, he will need heat-exchangers.



"China's 1st LNG cold energy ASU facility begins operation in Putian
Updated: 13 Nov 2010

Air Products said on Nov. 11 that China's first air separation unit (ASU) facility using liquefied natural gas (LNG) cold energy to produce industrial gases is up and running.

Located in Putian, Fujian province, the plant is a joint venture between Air Products and CNOOC Energy Technology & Services Limited, a subsidiary of China National Offshore Oil Corp (CNOOC).

The ASU plant is the first of its kind in China and is capable of producing more than 600 tons per day of liquid oxygen, nitrogen, and argon.

It is designed to liquefy air at low temperatures by using cold energy released during the LNG re-gasification process to produce industrial gas products.

SOURCE: China Daily"

Sinopec to Join Chevron Gas Project


The East Kalimantan concession includes the Ganal Block that covers the Gehem and Gendalo gasfields and the Rapak Block that includes the Ranggas gasfield. According to press reports, Chevron has said production from the blocks is expected to start in 2016.



"Sinopec to Join Chevron Gas Project
DECEMBER 2, 2010, 3:30 A.M. ET
By DAVID WINNING

China Petrochemical Corp. has struck a deal with Chevron Corp. to join a $6 billion-plus deepwater natural gas project off Indonesia, a person familiar with the matter said Thursday, in the latest push by Chinese companies to secure overseas energy assets.

China Petrochemical, known as Sinopec Group, signed an agreement with Chevron in Singapore on Tuesday to take an 18% stake in each of three deep-sea blocks off East Kalimantan that will underpin the proposed Gendalo-Gehem project, said the person, without disclosing financial terms.

The deal comes days after Cnooc Ltd.'s joint venture in Argentina paid $7.06 billion to take full control of the country's second-biggest oil and gas producer from BP PLC.

Chinese companies are increasingly targeting natural gas projects as the country efforts to reduce reliance on coal and foreign oil, which have made cities such as Shanghai among the smoggiest in the world.

State companies have invested heavily in building up infrastructure in China to funnel in foreign gas, including pipelines from Central and Southeast Asia and multibillion dollar terminals to receive ships carrying liquefied natural gas along the eastern coast.

The International Energy Agency predicts China's gas consumption will more than quadruple in the 2008-2035 period. Much of this demand will be met by overseas projects—the IEA forecasts China's annual natural gas imports will grow from around 176 billion cubic feet in 2008 to more than seven trillion cubic feet in 2035, accounting for 40% of the growth in inter-regional trade.

Sinopec has lagged behind domestic peers PetroChina Co. and Cnooc in buying overseas gas assets, partly because it has been slower to kick off construction of LNG receiving terminals.

As Asia's largest refiner, Sinopec's earnings are also more exposed to swings in oil prices and up to now it has concentrated on doing deals that can reduce its crude import costs.

Sinopec Group is the state-owned parent of Hong Kong and Shanghai-listed China Petroleum & Chemical Corp., which also lists American depository receipts in New York. Sinopec declined to comment on the deal in Indonesia.

San Ramon, Calif.-based Chevron said in November last year it was seeking partners for the Gendalo-Gehem project in order to mitigate risk in the venture, and hoped to have an agreement in place within a year.

Chevron, one of the largest oil and gas producers in Indonesia, describes Gendalo-Gehem as one of its "major capital projects," but has yet to carry out engineering and design work.

This means first gas output isn't likely before the second half of the decade even if there are no delays to engineering work, construction, or the approvals process with the Indonesian government.

Gendalo-Gehem aims to produce around 1.1 billion cubic feet of natural gas and 31,000 barrels of condensate—a petroleum liquid—a day at its peak, according to Chevron's 2009 annual report.

The deal will help fill a gap in Sinopec's technical armory, as the Gendalo-Gehem project will tap gas deposits beneath 6,000 feet of water. Much of the Chinese company's current oil and gas output is from shallow-water fields.

The person, who didn't wish to be named, said the farm-in agreement requires regulatory approvals in Indonesia and China.

Chevron's stake in the Rapak and Ganal blocks will fall to 62% when the deal is completed.

Italy's Eni S.p.A. owns 20% of both licenses, while the Indonesian government has the right to take a 10% interest, likely through state-owned oil and gas producer PT Pertamina.

Chevron's interest in the Makassar Strait block will fall to 72% when the deal with Sinopec closes. Pertamina has a 10% stake in this block.

Write to David Winning at [email protected]"

Sinopec Buys Occidental Unit for $2.45 Billion


Map of "Santa Cruz, Mendoza and Chubut provinces in Argentina"



"Sinopec Buys Occidental Unit for $2.45 Billion
DECEMBER 9, 2010, 10:00 P.M. ET

BEIJING—China Petrochemical Corp., known as Sinopec Group, said Friday it is acquiring 100% of Occidental Petroleum Corp.'s Argentina subsidiary for $2.45 billion.

Sinopec said in a statement it is acquiring all the assets of Occidental Argentina Exploration & Production Inc. and certain affiliates, collectively known as Occidental Argentina.

The acquisition comes less than two weeks after the international arm of China National Offshore Oil Co., Cnooc International Ltd., and Bridas Energy Holdings, agreed to pay BP PLC $7.06 billion for its 60% stake in Argentine-based Pan American Energy LLC.

U.S.-based Occidental Petroleum wasn't immediately available for comment.

Occidental Argentina has gross proven and probable reserves of 393 million barrels of oil equivalent with an interest in 23 production and exploration concessions in Santa Cruz, Mendoza and Chubut provinces in Argentina, of which 19 are operated by the company.

The company's production from the 22 producing concessions last year totaled over 51,000 barrels of oil equivalent per day.

The deal is Sinopec's first investment in Argentina's upstream oil and gas sector, and is subject to government approvals.

—Wan Xu contributed to this article."

Canada's Encana Attracts PetroChina in $5.43 billion deal


Canada's Encana land in North America


Encana assets in Canada



"Encana Attracts Chinese Partner
FEBRUARY 10, 2011
By EDWARD WELSCH


An Encana natural-gas well near Alix, Alberta, Canada. (Photo: Bloomberg News)

Encana Corp. said Wednesday it entered a 5.4 billion-Canadian-dollar (US$5.43 billion) deal with PetroChina Co. to develop hard-to-reach natural-gas reserves, further deepening the energy ties between Canada and China.

The agreement comes as Canadian oil and gas producers are seeking customers outside North America, which is currently awash in both fuels. In particular, they are targeting Asia, where energy prices are higher and demand is growing quickly.

Calgary-based Encana, one of North America's largest gas producers, said it and PetroChina will split the costs and profits from developing so-called shale and deep gas wells in a 635,000-acre area stretched across northeastern British Columbia and northwestern Alberta. The area, called Cutbank Ridge, has proven reserves of about 1 trillion cubic feet of natural gas and current production of 255 million cubic feet a day.

Encana and PetroChina signed a memorandum of understanding last summer to jointly develop shale gas properties. Encana executives have said they are actively seeking partnerships with foreign investors to help fund the development of a huge inventory of shale gas in western Canada.

"Fundamentally we have a very large resource potential on our lands—more than we can develop on our own," said Encana spokesman Alan Boras.

In a statement on its website, PetroChina said it had been seeking for years to work with major Canadian energy companies, and expects the Encana deal "to provide a platform for entering the major market in North America."

Encana shares, which were down 1.9% Wednesday in 4 p.m. composite trading on the New York Stock Exchange, surged nearly 11% to $34.15 in the after-hours market following news of the PetroChina deal.

The company took its first steps toward teaming up with Asian energy companies last March when it signed a C$565 million development deal, called a "farm in," with Korea Gas Corp., in which the state-owned South Korean utility agreed to shoulder the cost of additional exploration on Encana's land in exchange for a cut of the production.

A similar farm-in agreement was discussed with PetroChina, Mr. Boras said, but the state-controlled Chinese energy company pushed for a direct stake in the company's natural-gas assets.

PetroChina's last major deal in Canada was the C$1.9 billion acquisition in 2009 of a 60% stake in two oil-sands projects in northeastern Alberta owned by Athabasca Oil Sands Corp.

Encana's pact with PetroChina would be one of the largest foreign deals involving a Canadian resource since Canada's federal government struck down BHP Billiton Ltd.'s $38.6 billion attempted hostile takeover of Potash Corp. of Saskatchewan last year, ruling that the world's largest potash producer was of strategic interest to Canada.

However, the type of investment involved in the Encana deal isn't considered an acquisition under Canadian regulations, and so wouldn't be subject to the same degree of scrutiny.

Encana is scheduled to report its fourth-quarter and full-year results Thursday.

In addition to natural-gas properties, the joint venture with PetroChina includes about 700 million cubic feet per day of processing capacity, about 2,100 miles of pipelines and a gas-storage facility. The closing date of the deal depends on various government and regulatory approvals.

Encana owns the licenses covering a large territory in some of the most prolific shale gas basins in both the U.S. and Canada—11.7 million acres in total. It produces 3.3 billion cubic feet of natural gas a day.

As Canada is the No. 1 oil exporter to the U.S., most Canadian energy producers depend on demand from their southern neighbor for the bulk of their revenue. However, Canada has come under criticism for pollution caused by extraction from oil sands, and U.S. lawmakers have raised questions about the safety of a proposed oil pipeline expansion.

As a result, Canada has its eye on developing energy trade with Asia. Two proposed oil-pipeline projects and one proposed liquefied-natural-gas facility would ship energy to Asia from Canada's west coast."

China designed-and-built "world's most advanced 3,000-meter-deep water drilling rig"


"The first Chinese-designed semi-submersible drilling rig, Hai Yang Shi You 981, was recently launched at China’s Shanghai Waigaoqiao Shipbuilding’s (SWS) shipyard. (Image courtesy of CNOOC)"


"The sixth-generation semi-submersible was built to a design developed by the Marine Design & Research Institute of China. The deep-water drilling unit is capable of drilling up to 10,000 metres in water depths of up to 3,050 metres. It is equipped with DP3 and accommodation for 60 people. (Image courtesy of CNOOC)"



"CNOOC to Start Offshore Oil 981 in June
Posted on: Fri, 18 Feb 2011 05:39:40 EST

BEIJING, Feb 18, 2011 (SinoCast Daily Business Beat via COMTEX) --

China National Offshore Oil Corp. (CNOOC) is scheduled to drive Offshore Oil 981, or Haiyangshiyou 981 (in Chinese), to South China Sea in June, starting drilling in deep seas for the first time.

The equipment, the world's most advanced 3,000-meter-deep water drilling rig, will leave a shipyard of Shanghai Waigaoqiao Shipbuilding Co., Ltd. under wing of China CSSC Holdings Limited (SHSE: 600150) in two months. It will complete drilling three to four wells within this year.

Offshore Oil 981 will become a major player in exploring and developing China South Sea. The natural gas and petroleum outputs in its deep-water areas will hit 25 million tons of oil equivalents a year in 2015.

In 2020, CNOOC, China's largest offshore oil and gas producer, will strive to reach an annual output of 50 million tons of oil equivalents in these areas in 2020, equal to that of Daqing Oilfield, one of the largest onshore oilfields in the country.

The project is estimated to cost CNY 6 billion. The new deep-water drilling rig is as high as 137 meters and as heavy as more than 30,000 tons.

The drilling rig is filling a gap in China's extra-large equipment manufacturing field targeted at deep-water drilling operation, stressed Fu Chengyu, general manager of CNOOC. Now, the country has reached the sixth generation rig level, the most advanced all over the world. Previously, its semi-submersible rigs were of the world's third generation level.

The new deep-water drilling rig marks the great progress made in offshore drilling technology, pointed out Lin Yaosheng, general manager of the oil and gas giant's deep-water drilling rig engineering project team. It can work at the depth of 3,000 meters at most, compared with 300 meters for current drilling rigs in China.

CNOOC has made great achievements in offshore exploration and exploitation. Slightly earlier, it announced at the end of 2010 that the annual output of the offshore oilfields under its wing surpassed 50 million tons of oil equivalents.

The data suggested that CNOOC, formed in 1982, had reaped oil and gas from offshore assets as much as the output of Shengli Oilfield, the largest onshore oilfield in the country, said industry experts.

In addition, its listed arm CNOOC Limited (SEHK: 0883 and NYSE: CEO | PowerRating) reaped about CNY 38.91 billion un-audited revenues in the third quarter of last year with a surge of 63.8 percent year on year.

The surge was attributed to the increase in oil and natural gas output and oil price rise. It turned out 88.7 million barrels of oil equivalents during the period, rising 48.8 percent from a year earlier."

Note: Thank you to "Marchpole" for the post.

CPC's Chad Drilling Project Yields A Sea of Black Gold



"CPC's Chad Drilling Project Yields A Sea of Black Gold
Yuan Yan-shou and Staff Reporter | 2011-02-09 | 18:29 (GMT+8)


The CPC Corporation of Taiwan announced that it has discovered and commenced drilling on massive petroleum and gas reserves in Africa. Picture: The CPC petroleum refinery in Taoyuan. (File Photo/Deng Bo-ren)


Picture: Successful testing of the oil and gas reserves in the mining area. (Photo courtesy of CPC Corporation, Taiwan official website)

Taiwan's Chinese Petroleum Corporation (CPC) announced on Tuesday it has discovered massive crude oil and natural gas in the north central African country of Chad. Chu Shao-hua, chairman of the state-run CPC, revealed the news at a press conference.

The chairman estimated that the Chad exploration well, dubbed Benoy-1, could yield 9,800 barrels of crude oil and 35,000 cubic meters of natural gas per day. Chu said the whole oil field has an estimated 100 million barrels of oil worth more than US$9 billion. He expected the oil well will earn US$80 million in after tax revenue for the company each year, beginning from 2015.

The well Penoy-1 is the largest oil and gas resource the CPC has ever found in its 40-year history of exploration for oil overseas. In addition to Chad, the CPC currently has 18 oil exploring and producing projects in six countries, including the US, Ecuador, Venezuela, Libya, Australia and Indonesia.

Regarding the Chad oil drilling project, the CPC first signed a contract with the government of Chad in 2006 through the state firm's subsidiary OPIC. Under the contract, the CPC has the right to explore three oil fields in Chad. As of the end of last year, the CPC has invested US$42.76 million in its oil-exploring project in Chad.

Tang Xiu-ming, deputy director of the CPC's exploration department, said the areas in the vicinity of well Penoy-1 have similar oil and gas characteristics. "We will speed up our exploration and drilling works in the near future, with the hope of confirming the actual volumes of oil and gas reserves to then come up with production plans.

The CPC said the quality of the oil found in Chad is superior to that of Brent crude. Based on the current world oil price of US$90 a barrel, the well Penoy-1 has an output worth US$9 billion. After the deduction of 30% production rights for the Chad government, the CPC stands to gain US$1.6 billion in net profits.

References:

Chinese Petroleum Corporation (CPC) 中油

Chu Shao-hua 朱少華

Tang Xiu-ming 唐修明"

China to invest $2.5bn in Iran oilfield


Iran's Azadegan oilfield

http://www.zawya.com/story.cfm/sidANA20110225T150321ZTMK18/China-To-Invest-$2.5bn-In-Iran-Oilfield

"China to invest $2.5bn in Iran oilfield

TEHRAN, Feb 25, 2011 (AFP) - China is to invest $2.5 billion (1.81 billion euros) in developing Iran's South Azadegan oilfield that straddles the border with Iraq, Iranian news agency Mehr reported Friday.

"According to the final agreement, China will invest $2.5 billion in the field," Mehr quoted Naji Saadouni, president of Iran's Petroleum Engineering and Development Company (PEDEC), as saying.

The output of the field, currently 55,000 barrels per day (bpd), is expected to reach 320,000 bpd upon completion of the first phase of development, which has already started.

A second phase will boost output to 600,000 bpd.

Saadouni did not specify which Chinese company would undertake the development.

In 2009, the China National Petroleum Corporation (CNPC) and the National Iranian Oil Company (NIOC) signed a $1.76 billion deal to develop the neighbouring North Azadegan field, where they hope to extract 75,000 bpd.

Iran says the Azadegan deposit is one of the world's biggest, with reserves of 42 billion barrels. It is known as Majnoon in Iraq, where it is being developed by Anglo-Dutch giant Shell and Malaysia's Petronas.

Chinese oil major, Sinopec, is developing the Yadavaran deposit, which neighbours Azadegan on the Iraqi border in southeast Iran.

Japanese firm Inpex, which first won the tender, withdrew after the international community slapped sanctions on the Islamic republic over its controversial nuclear programme.

Since then, China has filled the vacuum to become a key economic partner to Iran, which produces an average of 3.7 million bpd, according to data from the Organisation of Petroleum-Exporting Countries (OPEC).

Iran's capacity is around 4.1 million bpd.

Iran has OPEC's second-highest oil output, and ranks second in the world in terms of natural gas reserves after Russia."

Sinopec and Australia Pacific in 20-yr LNG deal





"UPDATE 2-Sinopec, Australia Pacific in 20-yr LNG deal
Fri Feb 25, 2011 3:33am EST

* China's second-largest LNG import pact by volume

* Sinopec takes 15 pct stake in APLNG coal seam gas project

* Sinopec to supply planned terminal in Beihai

* Sinopec to buy 4.3 mln T LNG per year

(Adds analysts quotes, background, factboxes)

By Jim Bai and Rebekah Kebede

BEIJING/PERTH, Feb 25 (Reuters) - China's Sinopec clinched the second-largest single Chinese liquefied natural gas deal, and ventured for the first time into a foreign unconventional gas asset to feed a domestic boom for the clean fuel.

Sinopec Group, parent of Sinopec Corp , signed a preliminary deal for 20 years of LNG supplies with Australia Pacific LNG Pty Ltd (APLNG), and will acquire a 15 percent stake in the giant coal seam project owned by U.S. energy firm ConocoPhillips and Australia's Origin Energy.

Sinopec agreed to buy 4.3 million tonnes of LNG per year starting 2015 from the project in the eastern Queensland state, companies said, a significant step to clear the way for a final investment decision for the $35 billion project.

"The deal will help Sinopec diversify gas supply sources to meet Chinese demand for natural gas," said Sinopec's General Manager Su Shulin in a statement.

China, seeing gas as the most efficient way to cut carbon emissions, aims to triple consumption by 2020 to supply 10 percent of its total energy use from 4 percent now, curbing the use of dirtier burning coal.

And nearly a third of that demand will be met by imports of LNG and piped gas from Central Asia, Myanmar and potentially Russia. Energy consultancy Wood Mackenzie has forecast China's LNG imports to rise five fold to 46 million tonnes by 2020.

The 86 million tonnes volume covered by the Sinopec pact was only second to China's first LNG import deal sealed in 2002 when China National Offshore Oil Corp (CNOOC) secured 3.7 million tpy of gas from Australia's Northwest Shelf project for 25 years.

If the deal is finalised, share holdings of Conoco and Origin will be reduced to 42.5 percent each, the companies said on Friday.

BIG LEAGUE

"It's particularly significant because it catapults Sinopec into the big leagues in China. They have been the "also-ran" behind PetroChina and CNOOC," said Tony Regan, an analyst at Tri-Zen Capital in Singapore.

CNOOC, parent of CNOOC Ltd , is the leading Chinese LNG developer with three receiving terminals in operation and another two under construction, while PetroChina's two terminals were scheduled to begin operation from April.

Sinopec is building its first terminal in eastern Shandong, which will be fed from ExxonMobil's Papua New Guinea LNG project.

The latest deal would enable Sinopec to accelerate work at the proposed 17 billion yuan ($2.58 billion) terminal in the southern coastal city of Beihai in the Guangxi region expected to open in 2014.

Sinopec will supply the Australian gas to the Beihai terminal, which in January won initial government approval from the National Energy Administration, an industry source with direct knowledge of the project told Reuters.

The terminal will have an initial capacity of 3 million tonnes per year, expandable to 5 million tpy by around 2015, said the source.

Australia Pacific LNG, a 50-50 joint venture between Origin and Conoco, will have initial capacity of 4.5 million tonnes per annum (mtpa) of LNG, eventually ramping up to 18 mtpa and is expected to come online at the end of 2015.

"This clearly increases confidence that the project will proceed, so we expect now to intensify the dialogue we are having for other customers for the project," Grant King, managing director of Origin Energy, told reporters on Friday.

Earlier this week, the Australian government gave the environmental clearance for the $35 billion coal seam gas project in eastern Queensland state.

"They are in a much better position, that's for sure ... it will pretty well underwrite train one," said Di Brookman, an analyst with CLSA in Sydney.

Origin's shares were up 5.78 percent at A$16.83 BY 0635 GMT.

($1=6.578 Yuan)

(Reporting by Chen Aizhu and Jim Bai in Beijing and Rebekah Kebede in Perth; Editing by Ed Lane)"

Turkmenistan agrees to additional 20 billion cubic meters/yr of natural gas for China


Turkmenistan-China natural gas pipeline


Natural gas tanks in Puyang, Henan province. Emergency natural-gas strategic reserves should be built in the coming years, a senior energy policy adviser says.



"Turkmenistan agrees to raise natural gas supply to China
2011-03-02 20:32:48

BEIJING, March 2 (Xinhua) -- Turkmenistan has agreed to increase its natural gas supply to China by 20 billion cubic meters a year, China's top economic planning body announced Wednesday.

The two sides reached the consensus Tuesday during a meeting between Zhang Ping, minister of the National Development and Reform Commission (NDRC), and visiting Turkmenistan Deputy Prime Minister Baymyrat Hojamuhammedov, said a statement on the NDRC website.

The two countries would sign an inter-governmental framework agreement in the second half of this year, the statement said.

Last year, China National Petroleum Co. signed a deal with Uzbekistan to purchase 10 billion cubic meters of natural gas annually. The gas will be transported to China via the central Asia pipeline that runs from Turkmenistan to Horgos, a border city in Xinjiang.

The deal would ensure annually 40 billion cubic meters of imports from central Asian countries, including imports of 30 billion cubic meters per year from Turkmenistan.

Editor: Zhang Xiang"