China approves shale gas deal with CNPC: Shell

BEIJING -- Royal Dutch Shell announced Wednesday that the Chinese government has approved the company's shale gas exploration deal with the China National Petroleum Corporation (CNPC).

Huibert Vigeveno, chairman of Shell China, said at a news briefing that authorities have approved a production-sharing contract with China's largest oil and gas producer that will allow both sides to explore and produce unconventional gas in southwest China's Sichuan province.

The contract is the first shale gas production-sharing contract approved by the Chinese government.

Under the deal, Shell will drill wells in the Fushun-Yongchuan shale gas block in 2013 and 2014 to examine the geological features of the block. The company will then make exploitation plans based on the features, according to Vigeveno.

The chairman said Shell's current exploration shows that shale gas deposits in China are more abundant than in North America, although complicated geological features in China make it harder to tap the gas.

Vigeveno said Shell will seek further cooperative deals in China, but added that he isn't sure whether the company will sign new shale gas contracts in the short-term.

The CNPC and Chinese authorities have not confirmed the approval or commented on it.

Matthias Bichsel, director of the company's project and technology business, said Shell can bring its technology to China and speed up the exploration of the country's unconventional gas.

The CNPC and Shell signed the shale gas production-sharing contract earlier this month. Shell said it would apply its advanced technology, operational expertise and global experience to the project.