Last week, China agreed to a 30-year term natural gas purchase agreement with Russia, but China does not plan on becoming a net importer of natural gas, instead starting to make strides in cracking its own shale resources. Weatherford International (NYSE:WFT) is the most recent western oil services firm to form a joint venture with a Chinese national oil company to explore China's vast shale resources, offering the country technology and personal experience in hydraulic fracturing and horizontal drilling.
While one commercial natural gas well has come online, China's shale exploration program could possibly be hamstrung over the long term because of large and distant population densities, a lack of pipeline infrastructure, and most importantly, water scarcity.
For Weatherford, building a strong relationship with China could be a long-term growth driver, but with competitors already involved, will there be any pie be left over to eat?
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