Agip China BV, a subsidiary of Italy's ENI SPA, on Friday said the Chinese government has awarded it an exploration permit in the Qaidam basin in west-central China.
Agip signed a production-sharing agreement (PSC) with China National Petroleum Co. (CNPC), China's state oil company, covering a 7,000 sq km area postulated to hold natural gas reserves of 250 billion cu m. CNPC's operating company, PetroChina, will execute the contract.
Forecasts call for gas consumption in China over the next 10 years to grow 9-10%/year as the Chinese government begins replacing coke with gas for power generation and other industrial purposes. Consumption is expected to increase from the current 22 billion cu m level to more than 60 billion cu m in 2010.
ENI already is involved in exploration and production in the South China Sea and the Bohai and Tarim basins. The new agreement strengthens ENI's strategic presence in China, says Vittorio Mincato, CEO of ENI.
"This project is consistent with ENI's strategic plan of penetration of the international markets aimed at acquiring a stronghold in areas characterized by high hydrocarbon potential and at consolidating it[s holdings] where the company already has a significant presence," Mincato says.