French oil giant Total yesterday said it would finalize an agreement before July with China's biggest oil producer, PetroChina, to start exploring a gas field in Erdos Basin of northwestern China.

 

Total will sign a product-sharing contract (PSC) with Hong Kong-listed PetroChina in the first half of the year for a gas field in the resource-rich basin, bordering five regions such as Shaanxi Province and Inner Mongolia Autonomous Region, a senior official from Total China yesterday told China Daily.

 

"Our talks with PetroChina are now at the final stage," the official said, declining to be named.

 

Jacques de Boisseson, president of Total (China) Investment Co Ltd, yesterday told reporters that Total is talking with various oil companies in China including PetroChina and Sinopec for possible partnership in areas such as oil and gas exploration and marketing.

 

"There will be a project this year in the (oil and gas) exploration field," the Total China chief yesterday said on the sideline of a Sino-French oil and gas summit in Beijing.

 

Both Total officials said they didn't have concrete figures concerning the scale of the project's investment, or their shares in the gas field.

 

Foreign companies are entitled to a stake of less than 50 percent in a two-party partnership with their Chinese counterparts for oil and gas exploration in China, Che Changbo, a director at the Ministry of Land and Resources (MLR) said.

 

Bi Jianguo, spokesman of PetroChina, yesterday declined to comment.

 

China pumped 7.5 billion cubic meters (bcm) of natural gas from the Erdos Basin in 2004, 19 percent of the country's total gas output, figures from the land and resources ministry said.

 

Recoverable reserves from the northwestern basin amounts to 290.4 bcm.

 

In another attempt to cash in on China's huge gas demand, the French firm is also talking with oil companies in China, including the country's third-biggest oil producer, China National Offshore Oil Corp (CNOOC), to supply LNG (liquefied natural gas) to the gas terminals along the eastern coast.

 

The imported gas will come from Total's gas reserves in the Middle East, Boisseson yesterday said.

 

The company can supply "as much as they want," he said.

 

Total is eyeing all the other terminals except the two owned by CNOOC in Guangdong and Fujian provinces in the south, whose LNG sources have been contracted to Australia and Indonesia.

 

The government has approved about ten LNG terminals along the energy-intensive eastern coast, which belong to PetroChina, Sinopec and CNOOC, market observers said.

 

On the refining and marketing front, the Total China president yesterday said they would work with Beijing-based Sinochem to increase the number of its service stations in China to 500 within the next five years.

 

These service stations will be located in Beijing, Tianjin, Hebei and Liaoning provinces in the north and eastern China provinces, he said.

 

Boisseson said Total and Sinochem put five or six service stations into operation in the capital city.

 

According to the Total-Sinochem accord, as many as 58 service stations will be built in Beijing by the year 2012.

 

Total may use refined oil from its 200,000-barrel-ton-a-day joint refinery with Sinochem in Dalian of Liaoning Province, or purchase from Sinopec and PetroChina to fill their service stations, Boisseson said.

 

(China Daily February 22, 2006)