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Chinese oil companies have stepped up efforts to tap the country’s increasing oil demand as oil prices have continued to surge in recent weeks.
Earlier this week, China National Offshore Oil Corp. (CNOOC) announced that its BZ 25-1 Oilfield in North China’s Bohai Sea started operating, producing about 16,000 barrels of oil per day from 52 wells with 32 additional wells being completed.
Phase II production is expected to be on stream by early 2006, the company said.
The oilfield is the third-largest in the offshore area and has recoverable oil reserves topping 200 million barrels. The BZ 25-1 Oilfield was jointly developed by CNOOC and American oil company Chevron/Texaco.
Under the cooperation agreement signed in October 2002, CNOOC holds an 83.8 percent stake in the project, and Chevron/Texaco owns the rest.
In another development, China has been seeking to pipe oil from its neighboring countries to quench its thirst for energy.
As Russian President Vladimir Putin has started his two-day visit to Beijing, oil pipeline projects are likely to top the agenda.
Days earlier, Igor A. Rogachev, Russian Ambassador to China, said that a long-anticipated Sino-Russia oil pipeline plan would be unveiled in the next few months. The 2,400-kilometer pipeline will link Russia’s oil-rich Siberia with China’s Daqing.
On Sept. 28, China and Kazakhstan started the construction of a 988-kilometer pipeline, which is expected to be completed by December 2005.
The pipeline agreement — valued at an estimated US$700 million — was signed in May between China’s National Petroleum Corp. (CNPC) and Kazakhstan’s state-owned oil and gas company KazMunaiGaz.
Once completed, it will have an initial daily capacity of 200,000 barrels, far exceeding the 20,000-30,000 barrels supplied now to China via rail. The figure is planned to double by 2011.
According to Kazakh newspapers, the Central Asian country was also preparing a feasibility study for a natural gas pipeline.
Meanwhile, China is also in talks with Turkmenistan, Azerbaijan and Uzbekistan to discuss oil exploration in the Caspian Sea.
In international markets, crude oil futures hit a record high of US$54.45 Tuesday as a general strike in Nigeria, Africa’s biggest oil producer, added more tension to an already jittery market.
The prices slightly retreated to US$ 53.64 Wednesday but jumped above US$54 again Thursday on speculation sparked by a pipeline explosion in Mexico, raising economists’ concerns over the world economy.
U.S. investment bank Morgan Stanley said in a research note earlier this week that higher oil prices had prompted it to cut its global growth forecast for 2005 to 3.6 percent from 3.9 percent.
For China, the estimate drop could be 0.5 percent for a US$10 increase in oil prices, said Andy Xie, Morgan Stanley chief regional economist of Asia-Pacific.
In Shenzhen, prices of downstream products such as paint and plastic products have jumped 20 to 30 percent in the past few weeks due to surging raw material prices.
The thermoplastic material known as ABS resin, for example, is now priced at 11,000 yuan (US$1,330) per ton, nearly 3,000 yuan higher than last year.
(Shenzhen Daily October 15, 2004)
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