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Shell set for China natural gas deal
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Royal Dutch/Shell will sign another major long-term sales agreement for liquefied natural gas with China by the end of the year, its China chairman said yesterday.

Lim Haw Kuang declined to reveal which Chinese company would buy the clean energy or the volume that will be sold.

The Anglo-Dutch energy firm and Qatargas in April signed a pact with PetroChina Co to supply 3 million tons of LNG annually over 25 years.

Contract prices will reflect international energy prices for long-term sales, Lim said. Companies in such long-term LNG deals typically don't reveal contract prices. But Lim said prices would be good for China.

Lim said he expects to get government approval by the end of next year for a major joint venture with PetroChina and Qatar Petroleum International. The venture will cover refining, petrochemicals and marketing.

"It will be built in a major coastal province," Lim said. "The three parties are actively working on a feasibility study." He has ruled out Hainan Province for the venture which will have a refining capacity of more than 10 million tons a year.

The joint project was unveiled in June when the three parties signed a letter of intent. PetroChina will hold 51 percent, with Shell and Qatar Petroleum International each holding 24.5 percent, Shell said then.

Commenting on the global slowdown, Lim said it's the "best time" for the energy industry to invest during the weak economic cycle, which offers cheaper labor and material costs. "Our projects always stretch the next 30, 40 years. They are long term," Lim said.

In Shanghai, Shell is promoting its gas-to-liquid fuel, which produces lower levels of black smoke, particles and other emissions than conventional diesel fuel. Several buses are running on the GTL fuel on a trial basis and Shell expects more of them and diesel-powered taxis to use the fuel during the World Expo.

The GTL fuel, produced overseas and whose cost is linked to oil prices, is cheaper than domestic diesel based on current global crude rates, said Han Juan, a Shell business development manager. The fuel can be used in diesel engines, she said.

(Xinhua News Agency November 20, 2008)

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