According to Reuters, the Chuandongbei project, a venture of
the U.S. energy giant
) and partner
PetroChina Co. Ltd.
), is facing delay due to disagreement between the two parties
The $6.4 billion gas project - Chevron's largest in China - is
expected to produce 7.6 billion cubic meters of gas per year.
However, its commencement has been postponed to the second half
of the next year. Chevron had initially projected producing first
gas by 2010. A few months back, PetroChina's parent company,
China National Petroleum Co. (CNPC), had anticipated production
by end of 2013. But neither of the forecasts have borne fruit to
The two companies had entered into this 30-year deal in Dec 2007.
Almost six years have passed since the agreement, but the parties
are still in discussion over the developmental process of these
fields. Being a high-pressure, high-sulphur development project,
resultant technical complexity and high operational risks add to
The Chuandongbei project is a three-stage venture. The Chinese
government has however, suspended the approval for the second
phase of development amid the current delays, in order to drive
the parties' focus on completion of the first phase.
The entire project will comprise two sour gas processing plants
and five natural gas fields that will have gathering systems and
tie-ins to the plants. As per the companies, the project, located
in the northeastern part of the Sichuan province, has around 176
billion cubic meters of proven reserves.
Chevron is the operator with a 49% stake in the project whereas
PetroChina holds the remaining 51%.
Per the Reuters report,
China Petroleum and Chemical Corp.
) aka Sinopec had completed a similar sour gas development
project in about 32 months. The $10 billion Puguang project had
yielded first gas in 2010. The sole ownership of the project by
Sinopec had facilitated the smooth completion, according to
officials associated with the project.
Chevron currently carries a Zacks Rank #3 (Hold), implying
that it is expected to perform in line with the broader U.S.
equity market over the next one to three months.
Meanwhile, one can consider a better-ranked energy sector
SM Energy Company
) that sports a Zacks Rank #1 (Strong Buy).
CHEVRON CORP (CVX): Free Stock Analysis
PETROCHINA ADR (PTR): Free Stock Analysis
SM ENERGY CO (SM): Free Stock Analysis Report
CHINA PETRO&CHM (SNP): Free Stock Analysis
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