PetroChina, the mainland’s largest oil and gas producer, has taken a less direct approach, tapping into domestic suppliers which have partnerships with foreign firms with advanced drilling technology, or entering into joint ventures with foreign oil and gas firms that already work with suppliers with such technology.
Beijing has tasked both with enhancing national energy security by lifting domestic output of hard-to-extract unconventional oil and gas, with the help of advanced foreign technology.
They have also been asked to co-invest with private domestic and foreign firms as part of Beijing’s state-owned enterprise reform push to make them more efficient and better governed.
President Xi Jinping told a central government energy policy meeting in June that the mainland should “follow closely the trend of international energy technological revolution”.
The US has led the world in shale oil and gas production by deploying advanced technology, and is projected by the International Energy Agency to surpass Saudi Arabia and Russia as the world’s biggest oil producer by next year and become energy self-sufficient in two decades.
In June, Sinopec’s parent, China Petrochemical Corp, agreed to form a 15-year joint venture with FTSI International of the US that would see Sinopec benefit from FTSI’s expertise in fracturing underground rock formations to release oil and gas trapped in shale rocks.
The deal came three weeks after Switzerland’s Weatherford International and China Petrochemical agreed to form a joint venture to provide technology-intensive products and services to tap China’s shale gas resources, estimated by the US Energy Information Administration to be the world’s largest.