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Kuwait buys into Canadian shale play

Kuwait Petroleum's foreign exploration unit is taking a 30 percent stake in an oil-rich Canadian shale deposit operated by Chevron

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Kuwait Petroleum's foreign exploration unit is taking a 30 percent stake in an oil-rich Canadian shale deposit operated by Chevron, Chevron announced Monday.

The stake, which will leave Chevron with 70 percent and operating control of the operation, is being taken up by Kuwait Foreign Petroleum Exploration Company, or KUFPEC, for $1.5 billion.

The two companies will develop the liquids-rich Duvernay shale play in west-central Alberta, which Chevron called among the most promising shale opportunities in North America.

"This sale demonstrates our focus on strategically managing our portfolio to maximize the value of our global upstream businesses and is consistent with our partnership strategy," said Jay Johnson, senior vice president, Upstream, Chevron Corporation.

"The transaction provides us an expanded relationship with a valued partner."

Chevron, the second-largest US oil and gas company, had been looking for months for a partner to share the significant costs of developing the Duvernay shale assets.

Chevron has drilled 16 exploration wells to date in the Kaybob area of the Duvernay, comprising about 330,000 acres (1.4 million hectares).

Canada's Alberta province has the world's third-largest oil reserves, after Venezuela and Saudi Arabia, estimated at 171 billion barrels, though much of it is locked in harder-to-tap shale deposits.

Dow member Chevron shares jumped 0.6 percent to $118.36 in opening trade.