Shell China Exploration & Production Co. is making progress toward finalizing its purchase of a stake in China’s Zitong block in Sichuan basin from Sunwing Zitong Energy, a subsidiary of Ivanhoe Energy Inc. of Calgary.
Sunwing's Zitong block partners, Mitsubishi Gas Chemical Co. Inc. and China National Petroleum Corp., waived their rights of refusal and cleared the transaction, Ivanhoe said.
China’s Ministry of Commerce has yet to approve the transaction, which Ivanhoe Energy and Shell expect to close by Dec. 31.
The transaction was announced in January with a memorandum of understanding. On Oct. 15, Ivanhoe announced the signing of a definitive sale and purchase agreement. Terms call for Ivanhoe to receive up to $160 million.
After discovering natural gas on Zitong block, Ivanhoe decided it would rather concentrate on commercialization of its heavy oil upgrading process and developing oil projects elsewhere.
