Tue, Feb 01, 2011 - Page 11 News List

CNOOC to buy stake in US shale oil project

AFP, BEIJING

China’s CNOOC Ltd (中國海洋石油) said yesterday that it had agreed to pay US$570 million for one-third of US firm Chesapeake Energy’s shale oil and gas drilling project in the US states of Colorado and Wyoming.

The investment in the 323,749 hectare project in two basins is the second deal between the firms since October and signals greater efforts by both energy-guzzling countries to develop hard-to-reach resources.

CNOOC’s wholly owned subsidiary, CNOOC International, would buy the 33.3 percent stake, the Chinese company said on its Web site. In addition, it will fund two-thirds of the drilling costs up to US$697 million.

“It is a great pleasure to establish further cooperation with Chesapeake in shale oil and gas development,” CNOOC chairman Fu Chengyu (傅成玉) said. “The project highlights the joint interests of energy companies in both the US and China to accelerate the development of shale oil and gas, increase energy supply and reduce greenhouse gas emissions.”

Chesapeake announced in October that it had reached a deal with CNOOC to sell about a third of its interest in the Eagle Ford Shale project in South Texas for US$1.08 billion.

Aubrey McClendon, chief executive of the Oklahoma-based firm, said the latest deal would “provide the capital necessary to accelerate drilling” in the project in northeast Colorado and southeast Wyoming, and create thousands of jobs.

Shale gas comes from deep reserves that were thought inaccessible until the advent of new drilling methods, but costs are still usually above conventional gas and some environmentalists worry about pollution in drinking water.

Chinese companies are investing in resources as Beijing tries to secure access to raw materials needed to fuel its fast-growing economy.

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