Daily Telegraph: Shell pulls out of $18bn China pipeline project: “Shell, the embattled Anglo-Dutch oil and gas giant, suffered yet another blow yesterday” (ShellNews.net)
By Christopher Hope (Filed: 04/08/2004)
Shell, the embattled Anglo-Dutch oil and gas giant, suffered yet another blow yesterday when it pulled out of a $18 billion project to build a natural gas pipeline across China.
Shell, ExxonMobil and Russia's Gazprom were in talks with China's PetroChina to take a 15pc stake each in the "west-east project".
The consortium - led by Shell - and the Chinese company signed a framework agreement last July for the 2,400-mile pipeline to take 12 billion cubic metres of gas from fields in western China to markets in the east of the country.
It was billed as part of China's plan to use environmentally friendly energy to fuel its economic growth, reduce pollution and improve living standards.
But the talks between the parties failed to progress. By September, Sir Philip Watts, Shell's then chairman of the committee of managing directors, warned that Shell was driving a hard bargain on its investment. Shell said yesterday the deal was now off.
Nick Wood, Shell's head of external affairs in China, said: "PetroChina issued a letter of termination for the joint venture agreement following discussions between all parties to the joint venture framework agreement."
Analysts said the project had been under threat since BP pulled out of the consortium in 2002.
Shell stressed that it remained committed to China, with funding for its projects there totalling $1 billion - the highest in a single year.
A Shell spokesman in London added: "West-east, while an interesting opportunity, was one part of a very large market we are actively developing on many fronts. We remain positive about the potential in China."
The collapse of the project is the latest setback for Shell after it admitted earlier this year that it had overstated its "proven" oil and gas reserves by 23pc or 4.47 billion barrels. Shell's shares closed up 10 yesterday at 408.75p.
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