PetroChina makes major oil discovery

by Wing-Gar Cheng, originally published by Bloomberg | May 27, 2004

BEIJING PetroChina, China's largest oil producer, has made the nation's biggest oil discovery in a decade, bolstering its reserves by at least a third at a time when oil prices are at a record and the country's demand is soaring, the company said Thursday.

PetroChina Changqing Oilfield, a unit of the Beijing-based company, found 108.2 million tons of proven reserves and another 327 million tons of estimated reserves in the Xifeng oilfield in the northwestern province of Gansu, PetroChina's parent, China National Petroleum, said on its Web site.

China's oil import bill soared 55 percent last year as demand fueled by economic growth outpaced the ability of Chinese producers to find oil to replace reserves such as the 44-year-old Daqing field. The new field would be sufficient to meet China's consumption for one and a half years.

"This is a significant find, it would be almost 35 percent of PetroChina's proved oil reserves," said Gordon Kwan, a China energy analyst at Kingsway Financial Group, a Hong Kong-based brokerage firm. "It dispels rumors that their oilfield reserves are being depleted."

PetroChina shares on the Hong Kong stock exchange have risen 88 percent in the past year, more than a 26 percent gain in the benchmark Hang Seng index.

China's oil imports may rise 9.8 percent this year to 100 million tons, according to the government. The country may burn as much as 270 million tons of fuel.

Oil futures in New York have added $11 a barrel, or 38 percent, from a year earlier, raising China's oil import bill.

PetroChina needs to step up drilling and increase the capacity of the pipelines before it can classify the reserves in the Xifeng field in its accounts, Kwan said. The process could take two years, he said.

PetroChina's crude oil output rose 0.9 percent to 192.9 million barrels in the first three months of the year, it said in a statement on its Web site last month. The company processed 174 million barrels of crude oil into products such as gasoline and diesel, a rise of 18 percent from a year earlier.

Daqing in northeast China produces more than a third of the country's oil.

Editorial Notes: That makes it about 3.3 Giga-barrels, using an estimate of 7.5 barrels per ton. [Correct me if I'm wrong. -AF] As this graph shows, from Kjell Aleklett, the largest find in a decade is significant, although perhaps not huge by historical standards.