Exploration and Production
Chevron has interests in four operated and four nonoperated production-sharing contracts in China. Total average daily production in 2010 from the company's interests in China was 86,000 barrels of crude oil and condensate (18,000 net) and 46 million cubic feet of natural gas (13 million net).
Major Development at Chuandongbei
Chevron operates the 487,000-acre (1,969-sq-km) Chuandongbei natural gas area in the onshore Sichuan Basin. We have a 49 percent interest in the project. At an estimated cost of $5 billion, Chuandongbei is one of the large capital projects Chevron is developing in 2011. Plans call for two sour-gas processing plants with a combined capacity of 740 million cubic feet per day connected to five natural gas fields. Sour gas is natural gas containing hydrogen sulfide. It typically is processed into gas that meets customer specifications, natural gas liquids and elemental sulfur. Elemental sulfur can be used in fertilizer and other products.
In 2010, Chevron began construction of the project's first natural gas purification plant and started development of the Luojiazhai and Gunziping gas fields. An exploration well is planned to begin by the third quarter of 2011.
Construction of a second natural gas purification plant and gathering system in the northern part of the concession is planned to begin in the third quarter of 2011.
The first phase of the project is expected to begin production in 2012, with planned maximum total natural gas production of 558 million cubic feet per day upon completion.
Moving Into Deep Water in the South China Sea
Our work is expanding in China. In September 2010, Chevron acquired operated interests in three deepwater blocks in the South China Sea that cover approximately 5.2 million acres (21,000 sq km). The company has a 100 percent interest in Block 53-30 and Block 64-18 and a 59.2 percent interest in Block 42-05, under separate production-sharing contracts for each block.
In the fourth quarter of 2010, work started on a 3-D seismic acquisition program. An exploration well and an environmental impact study are planned for 2011.
Strong Partnerships Offshore
Chevron works in the Pearl River Mouth Basin area of the South China Sea with China National Offshore Oil Corp. (CNOOC) and ENI in the CACT Operators Group.
Under the CACT partnership, Chevron has a 32.7 percent nonoperated working interest in offshore Blocks 16/08 and 16/19, which comprise 12 oil fields, including the HZ 25-3 and HZ 25-1 fields. First production was reported in March 2010.
In Bohai Bay, the company holds a 16.2 percent interest in Block 11/19, which is operated by CNOOC.
Also in Bohai Bay, Chevron has a 24.5 percent working interest in the QHD 32-6 oil field, which was the first CNOOC-operated development involving foreign participation.
Marketing and Retail
There are more than 80 Caltex™ service stations in China, including in the Hong Kong and Macau Special Administrative regions. We also expanded our network of retail outlets, mainly in Guangdong province. The stations, operated by Caltex South China Investment Ltd., are equipped with retail convenience stores.
Our Caltex lubricants business has sales and marketing, manufacturing, and distribution operations throughout the country, including in key markets such as Beijing, Shanghai, Guangzhou, Chengdu, Tianjin and Hong Kong. We also sell and distribute our products in central China through a joint venture in Shanghai.
In 2010, we increased lubricants sales nationwide by more than 25 percent over the previous year by expanding our distributor network and forging new relationships with Chinese and international original equipment manufacturers. Caltex Havoline® and Delo® engine oils and coolants are among the best-selling lubricants and specialty products in their class and are widely used as factory fill and after-market products by automotive and original equipment manufacturers.
Chevron Global Aviation is one of the major jet fuel suppliers at Hong Kong International Airport. We also sell jet fuel to airlines that use Macau International Airport.
Chevron Phillips Chemical Co LLC and its affiliates (CPChem), which is 50 percent-owned by Chevron, operates a polystyrene plant in Zhangjiagang that is capable of producing 100,000 metric tons per year of polystyrene, used for plastic consumer products.
CPChem also has a 40 percent interest in Shanghai Golden Petrochemical Co. Ltd., a high-density polyethylene (HDPE) plant in Shanghai. HDPE is used in food and beverage containers, plastic pipe, merchandise bags, and milk jugs, among other things.
In addition, CPChem sells styrene monomer, a raw material used in the manufacture of packaging, automotive parts, electronics, rubber products, paper, housewares, construction materials, carpeting and toys.
Chevron Oronite maintains an office in Beijing to handle the sales of lubricants and fuel additives to national and international oil companies as well as to local lubricants blenders. The company provides products for marine, automotive, industrial and specialty uses.
Updated: May 2011
Cautionary Statement