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Calgary Herald: China oil find deemed biggest in years

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PetroChina Co. made a discovery in an offshore field in eastern Bohai Bay that that may be the largest in East Asia in 33 years.

The field may hold as much as 2.2 billion barrels of oil, China’s official Xinhua news agency reported on its website, citing officials at the Beijingbased company it didn’t identify.

The field might produce 200,800 barrels of oil a day in three years, Xinhua said, enough to meet 95 per cent of the needs of PetroChina’s largest refinery in Dalian.

“That’s a pretty big field,” said Ian Cross, vice-president of business intelligence at Inc., an Englewood, Colo.-based research company. “We only get a few discoveries a year in that range worldwide.”

If the field’s geological characteristics are similar to other Bohai Bay reservoirs, PetroChina, China’s largest oil company, may ultimately extract 500 million barrels, Cross said Wednesday in a telephone interview.

That would put the field on par with Chevron Corp.’ s $3.5-billion Tahiti field in the Gulf of Mexico, which is scheduled to begin production next year.

The last find in the Asia-Pacific region in excess of one billion barrels was the 1974 discovery of Vietnam’s Dai Hung field, Cross said.

“Things peaked in 1999 with the deepwater discoveries in places like West Africa and Latin America,” he said. “In the last couple of years, there haven’t been many big discoveries to speak of.”

PetroChina will announce details of the discovery in May or June, Xinhua said. Vice-chairman Jiang Jiemin described the field as “very rich” in remarks to reporters in Hong Kong on March 19.

Warren Buffett’s Berkshire Hathaway Inc. is PetroChina’s largest foreign investor with a 1.1 per cent stake.

Other oil companies involved in Bohai Bay exploration or production include Houston-based ConocoPhillips, the largest acreage holder; Royal Dutch Shell PLC; Chevron; Anadarko Petroleum Corp.; and Apache Corp., according to the U.S. Energy Department.

Chinese oil demand is expected to rise 6.1 per cent this year to 7.6 million barrels a day, extending gains of seven per cent in 2006 and 4.2 per cent in 2005, the Paris-based International Energy Agency said in a March 13 report. Only the United States consumes more oil than China.

PetroChina shares were little changed at $9 HK in Hong Kong. The stock fell 18 per cent this year amid surging costs for equipment and labour used to find and pump oil and natural gas.

The company plans to boost spending on exploration and development by 25 per cent this year to $24 billion US, exceeding the $21-billion capital budget of ExxonMobil Corp., the world’s largest energy company. PetroChina is a unit of state-owned China National Petroleum Corp.

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