A relationship forged from Devon Energy Corp's operations in the South China Sea helped Sinopec seal a unusual $2.5 billion deal to explore for oil and gas in emerging shale fields in North America, Devon's chief executive said at the Howard Weil Energy conference. The deal, announced in January, gives China's Sinopec a one-third stake in 1.4 million acres in five developing oil and gas formations under exploration by Devon.
Devon, based in Oklahoma City, developed a relationship with Sinopec's chairman, Fu Chengyu, when he headed China's offshore oil and gas company, CNOOC Ltd, Devon CEO John Richels said in an interview on Sunday. "Mr Fu was at CNOOC, and we have a long, pretty good relationship with CNOOC from the South China Sea on projects that we operated," Richels said in an interview on Sunday.
Devon and CNOOC were partners in the Panyu field offshore China for a number of years. Devon sold the field to CNOOC in 2010 for $515 million. Fu Chengyu took the helm of Sinopec Group last April. Chinese companies like Sinopec and CNOOC have spent billions in joint ventures with US energy companies like Devon in a quest for knowledge about the exploration and production of oil and gas from shale and other unconventional formations.
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