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Shell, PetroChina in 20-Year Gas Deal

The Associated Press

SHANGHAI, China -- Royal Dutch Shell (RDS.A Quote) and PetroChina(PTR Quote) have signed an agreement for China to buy up to 40 million tons of liquefied natural gas over 20 years, Shell said Tuesday.

The deal, signed in Beijing on Monday, stems from a conditional agreement by the two companies last year. Prices for the LNG and the amount of investment involved weren't disclosed.

China has continued to lock in energy supplies to help meet long-term demand even as the global financial crisis crimps demand for resources.

"This is a significant step forward in the cooperation between Shell and PetroChina and highlights Shell's continued contribution to assist PetroChina in providing clean energy supplies to China," Shell's executive chairman in China, Lim Haw Kuang, said in a statement.

The agreement calls for Shell to sell up to 2 million tons of LNG a year, for 20 years, to PetroChina International, a wholly owned subsidiary of oil and gas producer PetroChina, Shell said in the statement.

Part of the LNG will come from the Gorgon project offshore Australia's west coast, the official Xinhua News Agency said, citing Shell China. The Gorgon gas fields are operated by Chevron(CVX Quote) which has a 50% stake. Shell and ExxonMobil(XOM Quote) each have a 25% stake in the project.