China’s CNPC buys 35 % stake in Shell’s Syria unit

China National Petroleum Corp., the country’s top oil producer, said Wednesday it had acquired part of a Shell subsidiary in Syria, the latest move in its global quest to secure energy resources.

The deal gives CNPC a 35 percent stake in Syria Shell Petroleum Development (SSPD), which was wholly owned by Royal Dutch Shell, the Chinese company said in a statement.

China has been aggressively securing overseas oil production contracts as it seeks to meet soaring energy demand at home.

SSPD has interests in three production licences — Deir-Ez-Zor, Fourth Annex and Ash Sham, which are operated by the Al Furat Petroleum Company. Shell has a 31.25-percent stake in AFPC, it said.

The licences cover around 40 oil fields and Shell’s share of output from the fields was 23,000 barrels of oil equivalent per day last year, it added.

CNPC already had an interest in the production licences and in AFPC through its 50-percent ownership of Himalaya Energy Syria BV.

The agreement strengthens the partnership between Shell and CNPC, and the two firms will “continue growing and investing in attractive opportunities in Syria’s upstream industry”, the statement said.

Syria’s oil production has steadily declined over the past decade while its gas output has risen. The country has estimated gas reserves of 284 billion cubic metres (9.94 trillion cubic feet).

Shell on Sunday also signed a 30-year agreement with PetroChina, the listed arm of CNPC, and Qatar Petroleum to search for natural gas in the Gulf state’s Block D area.

The company signed a contract with state-run Syria Petroleum Co., or SPC, in March 2003 to undertake an enhanced oil recovery project for Kbebah field in the northeast of Syria in al-Hasakah governorate. The first Sino-Syrian joint venture, Kawkab Oil Company, was created in Damascus in 2004 with the aim of exploring oil and gas in the Kbebah area. Each of the state-owned Syrian Petroleum Company and China National Petroleum Corp., holds a 50 % stake in the joint-company.
The company is in discussions with the Syrian government to build 100,000-barrel-a-day refinery in Deir Ezzor in eastern Syria, he said. The refinery is expected to cost more than $2 billion, according to Syrian officials.