Shell intends to expand downstream of China's natural gas sector

According to foreign reports, Royal Dutch Shell hopes not only to increase investment in the upper reaches of China's natural gas sector, but also increase investment in the downstream to obtain profits from each link.

In an interview with Dow Jones Newswires, Shell Haoguang’s executive chairman, Lin Haoguang, said: “I do not want to be the largest international oil company that participates in the supply of liquefied natural gas (LNG) to China. In terms of natural gas, I hope to see it from upstream to downstream. There is investment throughout the value chain."

Shell has already participated in a number of upstream natural gas projects in China, including jointly developing shale gas with PetroChina in the Sichuan Basin and providing LNG to China through projects in Qatar and Australia.

However, Shell is also quietly paving the way for entering the downstream of China's natural gas sector. An informed source earlier this year stated that Shell plans to purchase a partial stake in a LNG import terminal in Zhoushan City, Zhejiang Province.

Lin Haoguang said that Shell hopes to be involved in various fields, including natural gas processing, marketing, and construction of receiving terminals for LNG cargo ships. He said: "The use of LNG as a transport fuel contains a huge market. This is another area where Shell can supplement China."

At the same time, Lin Haoguang said that Shell and its partner Qatar Petroleum International and CNPC’s parent company, CNPC, are promoting a smelting and petrochemical plant project in Taizhou, Zhejiang. This project passed an administrative obstacle in May this year, so the feasibility study can be continued and it is now eligible for further government evaluation and approval.

CNPC will hold 51% of the shares in Taizhou, while Qatar Petroleum and Shell hold 24.5%. Lin Haoguang said that once completed, Qatar Petroleum will supply Shell with this integrated smelter, petrochemical and marketing projects. When PetroChina Group reached a preliminary framework agreement in October 2011, it said that imported condensates and raw materials will be used to produce ethylene and other petrochemical products.

In the second round of bidding later this year, Chinese private companies may be required to work with other foreign oil companies such as Shell to develop China's shale gas reserves. In the first round of bidding in 2011, only China's state-owned enterprises allocated shale gas blocks.

Lin Haoguang said: “If I encourage these private companies and foreign companies to accelerate the potential of shale gas development research, I am not surprised.” Although China will achieve shale gas production by 2020 to 60 billion -100 billion cubic meters The goal, analysts have always expressed doubts, but Lin Haoguang believes that there is no reason why China cannot reach this goal.

He said: "This is a challenge, but I don't think that once they have the right policy framework and get the relevant skills quickly after appropriate policy support and stimulation, there is no reason for China to fail."

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