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The Changqing Subsidiary of PetroChina, the largest oil producer in China, has been forced to sacrifice one billion yuan (US$125 million) in profits to protect drinking water supplies in northwest China's Shaanxi Province.

 

The company has sealed 102 wildcat oil wells close to the Wangyao Reservoir, a drinking water source for a population of 300,000 in Yan'an City, amid fears there was a risk of contaminating the underground water. The drilling wells produced 80,000-100,000 tons of crude oil a year.

 

"The closure of the wells and the relocation of 26 oil pipelines linking the wells will inflict one billion yuan (US$125 million) in direct economic losses this year," said Su Zhifeng, head of drilling operations.

 

"However, guaranteeing the safety of the drinking water makes the sacrifice worthwhile," he said.

 

The Changqing Oilfield Co., responsible for the exploitation of 370,000 square km of proven oil resources in the Erdos Basin, reported 7.02 million tons of crude oil production in the first eight months, accounting for nearly one tenth of the total crude oil output of China National Petroleum Corp, the parent company of the listed PetroChina.

 

(Xinhua News Agency November 1, 2006)