Unocal and Shell Pull Out of Deal in East China Sea

Unocal Corp. and Royal Dutch/Shell Group said Tuesday that they would not go ahead with five contracts to explore for natural gas in the Xihu Trough in the East China Sea.

El Segundo-based Unocal said it expected to take a $10-million after-tax charge in the third quarter to relinquish lands and settle obligations.

Don R. Hansen, vice president of Unocal International Energy Operations, said the company elected not to proceed with the project “for commercial reasons.” The company had spent the last year conducting “a detailed resource assessment and studied various development options,” Hansen said.

Units of Unocal and Shell each hold 20% working interest in the contracts. Other participants are China National Offshore Oil Corp. and China Petrochemical Corp., each with 30% interests.

The Xihu Trough is about 250 miles east of Shanghai.