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China finds huge oil field

China has found a huge offshore oilfield that could become the energy-hungry country's biggest new oil source in a decade, a state news agency said yesterday.

The scale of the discovery, if confirmed, would be welcome news for Beijing, which is struggling to step up domestic oil production to reduce reliance on rising imports to fuel its booming economy.

China is the world's No. 2 oil consumer behind the US and its oil imports rose by 14.5 percent last year.

PetroChina Co (中國石油天然氣), which found the new field in Bohai Bay off China's east coast, estimated its reserves at 2.2 billion barrels (297.3 million tonnes), the Xinhua news agency said, citing unidentified company sources.

"The newly found oilfield is the largest China has discovered over the past 10 years," the report said.

PetroChina, China's biggest oil company, said last week it found a new oilfield in Bohai Bay, but gave no details.

PetroChina refused to release any information on the Bohai Bay field yesterday.

Largest in a decade

Han Xuegong (韓學功), a Beijing-based professor at the China National Petroleum Corp (CNPC) Managers Training Institute confirmed that the discovery is the largest in a decade.

The country's top oil and gas producer, CNPC is the parent of Hong Kong-listed PetroChina.

"Oil output from the oil field could exceed what PetroChina has drilled from Tarim Basin, which was discovered in the 1980s," Han said.

PetroChina will announce details about the oil field in May or June, Xinhua said.

If the oil field's reported size is accurate, "China will have added a valuable upstream asset that can rival the country's leading oil production centers in the future," Steven Knell, an energy analyst for the Global Insight consulting firm, wrote in a report that was sent to clients.

However, despite its size, it was unclear how the field would affect China's need for imports.

Daily production could reach 200,000 barrels within three years, Xinhua said.

But that still would only represent just a fraction of China's imports, which now run to 2.9 million barrels per day.

China met its oil needs from domestic fields until the late 1990s, when it became a net importer.

Demand is rising by about 7 percent a year, but domestic production last year rose by just 1.7 percent.

Imports last year accounted for 47 percent of total consumption.

Blistering growth

Economists say that Chinese oil demand, driven upward by blistering economic growth that reached 10.7 percent in 2006, has strained world supplies and helped to push up prices.

The biggest recent domestic oil discovery, also made by PetroChina, was a field found in the mid-1990s in the Tarim Basin in the country's desert northwest.

Chinese oil companies have been spending heavily on exploration in the northwest and coastal areas, but results have so far been disappointing.

Elsewhere, state oil companies have spent billions of dollars to gain access to oil and gas supplies in Central Asia and Africa.
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