Disagreements between partners Chevron and PetroChina are reportedly delaying a $6.4 billion gas project in China, industry sources told Reuters.

The parties don’t agree over how to develop the technically tricky fields, the story said.

The Chuandongbei project is Chevron’s largest investment in China.

First gas is delayed until the second half of 2014, Reuters said, nearly 7 years after Chevron and PetroChina won a 30-year deal to produce 7.6 billion cubic meters of gas a year.

First gas was expected to be delivered in 2010, according to initial forecasts by PetroChina, and four months ago, CNPC — PetroChina’s parent — said production would start by the end of 2013.

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

Chevron said the first natural gas processing plant—designed for a maximum total production of 258 million cubic feet per day—was  expected to be mechanically complete at the end of 2013. It said in a 2013 fact sheet that it planned to start an exploration well at Chuandongbei in the third quarter of 2013.

A second plant in the project plans is designed for a maximum total daily natural gas production of 558 million cubic feet.

China is the biggest energy user in the world and the fourth-largest consumer of gas.

“There are some discrepancies over how to develop the fields between PetroChina and Chevron,” a Beijing-based industry official told Reuters, 2,000 square-kilometer block in Sichuan basin in southwest China.

Chevron is the operator of the project and holds a 49 percent stake. PetroChina holds the rest.

“By last February, Chuandongbei had cost $2.1 billion, local media reported.

“The project is Chevron’s largest upstream investment in China, where it also has a much smaller offshore portfolio,” Reuters said.


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