Partnership boosts China's energy future

09:06, February 11, 2011      

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PetroChina announced a major deal Thursday as the company prepares to invest $5.4 billion in Canadian gas producer Encana, a deal that analysts say will secure a stable energy source to feed Beijing's rising demand and raise its profile in the global energy market.

In the country's largest overseas natural gas investment, PetroChina is to inject billions to fund a 50-50 joint venture with Encana, North America's top gas producer, to explore shale and deep gas, a problematic natural gas deposit, in Canada's Cutbank Ridge area, according to an online statement.

Stretching across northeastern British Columbia and northwestern Alberta, the assets cover 1.3 million acres of land, containing nearly 28 billion cubic meters of natural gas with a current daily production of 7.2 million cubic meters.

The move is expected to provide a platform for the Chineseoil giant to enter the North American market in a major fashion, PetroChina said in the statement.

Encana chief executive Randy Eresman called the agreement a "major milestone" in the Canadian company's developing relationship with its Chinese partner, and said that it will enable the company to develop faster.

Its shares surged nearly 11 percent to $34.15 in the after-hours market on the New York Stock Exchange following the news.

Dong Xiucheng, director of the China Petroleum Industry Development Research Center, told the Global Times Thursday that the purchase will provide a stable source for China's energy demand.

Despite abundant reserves in China, the unconventional gas deposits are yet to be commercially exploited on a large scale due to technical problems.

"Compared with energy giants in Western countries, China still lags behind in energy exploration, oil refining and chemical engineering," Dong said, adding that this investment will give PetroChina a chance to learn and improve its technology.

China plans to enlarge the proportion of natural gas consumption from 4 to 8 percent by the end of 2015, according to China Oil News.

Lin Boqiang, director of the China Center for Energy Economic Research at Xiamen University, told the Global Times that nearly half of the natural gas used in China by 2020 will be imported, with a surge to come in the next few years.

According to the International Energy Agency, China's energy demand has doubled since 2000, and the country overtook the US to become the largest energy user last year. By the end of last year, Chinese companies had spent $24.6 billion on oversea oil and gas acquisitions, the Financial Times reported.

With demand increasing, Beijing has been pushing for domestic energy firms to go global and secure resources in Africa and South America, Dong noted.

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