Green Dragon in talks with Chinese state-backed firms over fruits of disputed drilling
HK natural gas explorer and mainland energy giants are caught in a rights dispute over production work in wells amid a central government push to secure fuel reserves
A dispute between a Hong Kong-based natural gas explorer and the mainland's energy giants over drilling rights underscores the growing priority Beijing is placing on securing fuel reserves to power its growing economy.
Green Dragon Gas, an explorer for natural gas trapped between coal seams, is trying to resolve a disagreement with state-backed partner CNOOC and its China United Coal Bed Methane (CUCBM) unit on the sharing of reserves and output from drilling done allegedly without its consent.
Grewal, the founder and owner of a 58 per cent stake in Green Dragon, said about 1,500 wells had been drilled in six areas where it had exploration rights.
He said "a significant portion" had been done by CNOOC and CUCBM, while the rest was carried out by PetroChina and its parent China National Petroleum Corp.
Beijing is eager for energy firms to boost the production of unconventional gas such as coal seam gas, as well as tight gas and shale gas - gas trapped deep underground that requires sophisticated drilling technology to extract. This is because the mainland has only 1 per cent of the world's easy-to-get conventional gas reserves, and demand growth far outstrips production, prompting rapid growth and dependence on imported gas that makes up of about 25 per cent of consumption.
