PetroChina is evaluating bids from foreign oil firms to help produce natural gas from a field where nearly 4 years ago a gas blow-out killed hundreds.

Companies including U.S. firm Chevron Corp , Norway's statoil and French Total submitted bids to develop medium-sized Luojiazhai field in Sichuan province, to apply technology to extract toxic sulphur contained in the gas.

"PetroChina does not have the technology to tackle field with such high sulphur content," said a Petrochina official familiar with the field's production plans.

The Chinese energy giant is keen to repair its badly scarred image after a gas well explosion at the same field claimed 234 lives in December 2003 in one of China's worst industrial disasters. The incident also forced the company's former Chairman Ma Fucai to step down.

PetroChina proved in 2003 about 2 Tec (58 Bcm) of gas reserve in the field, in the northeastern part of Sichuan, and had planned to build a field with annual production capacity of 71 Bcf (2 Bcm) a year.

The field contains a third of a pound (150 grams) of sulphur in 35 cf (1 cm) of gas, said the PetroChina official, an extra-high content of sulphur. A second PetroChina official said one of these companies would be picked as a partner under a production sharing contract, but declined to elaborate. Chevron has had experience with high-sulphur-content gas at its operations onshore Kazakhstan.

China, the world's second-largest oil consumer, has been aggressively boosting natural gas production in recent years -- now growing at double-digit -- to combat declining oil reserves.

But unlike its offshore sector which was open to foreign investors since 25 years ago, state oil firms have guarded the onshore oil and gas business more carefully, seeing it more strategic.

Only a handful of companies such as Shell and Total are operating in China's onshore sector of mostly natural gas rather than crude oil.

Source: Reuters

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