PetroChina, Chevron Sichuan Gas Project in China Starts Output

  • Gas well-A in Luojiazhai started pumping gas in December
  • Phase one of the sour-gas project to produce 3 bcm a year

Chevron Corp. and PetroChina Co. started natural gas production in China’s southwestern regions of Sichuan and Chongqing, eight years after signing a production-sharing agreement.

Gas well-A in Chongqing’s Luojiazhai gas field began commercial natural gas production on Dec. 30, China National Petroleum Corp., PetroChina’s parent, said in a statement Monday. PetroChina had signed the 30-year agreement with Chevron in 2008, under which the second-largest U.S. oil producer took a 49 percent stake in the parcel and became the operator.

The Luojiazhai project, the first phase of development, will produce 3 billion cubic meters of gas a year, according to the statement. Both parties will work on phase two and three in the same area. The three phases together, known as the Chuandongbei project, cover about 800 square kilometers (309 square miles), according to the statement.

The partners had promised to produce 2 billion cubic meters of gas by 2010 and 6 billion cubic meters by 2013 from the Chuandongbei project, China’s largest onshore oil and gas exploration venture with a foreign partner.

Chevron beat Royal Dutch Shell Plc, Statoil ASA and Total SA to win the right to develop the so-called sour-gas reserves at Chuandongbei. Sour gas refers to natural gas that contains a high level of hydrogen sulphide.

— With assistance by Guo Aibing, and Jing Yang

Before it's here, it's on the Bloomberg Terminal.