Total Expects OK on China Sulige Gas Project Soon
France's Total SA expects the Chinese government to approve its joint-venture South Sulige gas project in China "in a few months", a senior company official said Tuesday.
China National Petroleum Corp. is to be the operator of the field, and Total's stake will be 45%, Jean-Marie Guillermou, senior vice president for Asia Pacific, Exploration and Production, told Dow Jones Newswires.
"This year we have decided that CNPC will be the operator and Total will be the minority partner. We are 45%, and CNPC will contribute the rest," Guillermou said on the sidelines of a Beijing energy conference.
China has to rely on foreign expertise to produce gas from some of its most abundant gas fields. In March, Royal Dutch Shell PLC announced it had signed a 30-year deal with CNPC to jointly develop and produce natural gas in the Sichuan basin from technically-difficult tight deposits. Chevron Corp. also has a 30-year deal to produce gas from a high-sulfur deposit in Sichuan.
Guillermo didn't say whether CNPC or its listed unit, PetroChina Co., which has been carrying out technical studies on the field with Total, will handle the field operatorship.
Total has been doing advance work for several years on the 2,390-square-kilometer block in the resource-rich Ordos Basin, after signing an initial agreement in March 2006.
A CNPC media official said he had "no information available on this." The two companies had set a deadline for the end of January to agree on financial terms for the exploitation of the field and to submit them to the government's economic planning agency, the National Development and Reform Commission, but the deadline passed without an announcement.
In May last year, CNPC said that once South Sulige is formally launched, Total could drill around 2,000 wells over the life of the field, projected at 20 to 25 years, and that peak production is forecast at nearly 3 billion cubic meters annually, to be reached three years after output starts.
The Sulige reserve is characterized as a "tight" gas area, as the impermeability of the rock layers means many more wells than usual are needed. Gas produced by Total will be sent to China's transnational West-East gas trunk pipeline for delivery to Shanghai or other destinations to be decided on by CNPC, Total chief executive Christophe de Margerie said in December.
Total's investment in the South Sulige project "will be multibillions of is several billion--but for the initial investment, this is far less, but still more than $1 billion," de Magerie said.