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PetroChina buys stake in Peace Region shale gas project

PetroChina, China's biggest oil producer, is further venturing into Canada's shale gas industry, buying a 20 per cent stake in Royal Dutch Shell's Groundbirch project, between Dawson Creek and Fort St. John. PetroChina, under state-owned China National Petroleum Corporation, has been working with Shell for some time.

The value of the deal is unknown, but it's been rumoured to be over $1 billion.

This transaction follows an interview last September in which Shell Canada President Lorraine Mitchelmore warned that Western Canadian producers would need to expand to Asian markets. A similar deal between PetroChina and EnCana was called off last summer, that would have given the Chinese company a 50 per cent stake in EnCana's Cutbank Ridge business assets for $5.4 billion.

According to Reuters, PetroChina and other Chinese state oil giants, have been looking all over the world for reserves to fuel China's rapidly-growing economy. Shale gas and oil sands assets in North America have been of particular interest in the past year.

Shell says Groundbirch's natural gas output is 125 million cubic feet a day.