US links up with Chinese firm in shale gas project

Shenhua is not the first Chinese company to invest in North America's shale gas business. At the beginning of 2012, State-owned China Petroleum & Chemical Corp, otherwise known as Sinopec Co, acquired one-third of Devon Energy Corp's stake in five shale projects in the US.

A Sinopec expert who declined to be identified said that by the end of 2015, the company's shale gas output will reach 2 billion cubic meters, accounting for one-third of the country's shale gas production target.

Wang Xiaokun, an energy analyst at domestic commodities consultancy Sublime China Information Group Co Ltd, said China will have a natural gas shortage of about 10 billion cubic meters this year, which has led to accelerated development of shale gas projects.

"Shale gas is an important unconventional natural gas resource. It has to be researched and developed in China under the current energy structure," she said. "Furthermore, more attention should be paid to the development of the downstream businesses of the shale gas industry."

The International Energy Agency, the Paris-based adviser to oil-consuming countries, predicts that the US, fueled by booming output from shale resources, will overtake Russia and Saudi Arabia to become the world's top energy producer by 2015 and be close to energy self-sufficiency within two decades.

China's Ministry of Land and Resources estimates that the country holds around 25 trillion cubic meters of shale gas reserves, which is 32 percent bigger than that of the US.

However, the huge resource remains untapped because of geological complexity and technological obstacles.

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