BEIJING, Jan 17, 2007 (Dow Jones Commodities News via Comtex)
China National Petroleum Corp. (CNPC.YY), or CNPC, the country's largest oil and gas producer by assets, said Wednesday that it will jointly explore the resource-rich Tarim field in northwestern Xinjiang with rival China Petrochemical Corp., or Sinopec Group, the nation's second-largest producer.
It would be the first time that the two state-owned companies are jointly exploring for oil and gas in China.
The reason for their cooperation likely stems from the challenges that are expected to confront any petroleum explorer there, given the region's complex geology.
The companies' joint effort also reflects China's eagerness to increase domestic oil and gas production to fuel the country's booming economy.
Tarim field, essentially the entire Tarim Basin, is thought to contain possible oil and gas reserves exceeding 15 billion metric tons of oil equivalent, said CNPC in a posting on its Web site.
Much of Tarim is filled by the sands of Taklamakan Desert, while the basin is hemmed in by several high mountain ranges.
In Tarim last year, CNPC produced 6.05 million tons of crude oil and 11 billion cubic meters of natural gas, or 15 million tons of oil equivalent.
Sinopec, which is behind CNPC in terms of the number of blocks it has in Tarim, produced about 5 million tons of oil equivalent of gas there.
The fact that the energy major is just entering the production stage in Tarim is probably why Sinopec's 2006 gas output from the field was just one-third of CNPC's.
On Jan. 12, geologists from the two companies held a conference to exchange information on their field achievements and use of technology.
But in its Web posting, CNPC didn't say how the two companies will jointly strengthen their exploration efforts in the field in the future.
"We welcome the joint exploration, and we have strong technology in marine-originated exploration," said an official on the board of China Petroleum & Chemical Corp. (SNP), a listed unit of Sinopec Group. The official declined to be identified.
Tarim Basin consists of rock statra that once laid undersea.
The official declined to comment whether Sinopec will conduct exploration work in CNPC's blocks in Tarim.
Since late last year, CNPC has offered foreign companies a total of 11 blocks in a tender, hoping to bring in foreign exploration expertise. "We are waiting for foreign companies to start bidding," said an official at PetroChina Co. (PTR), a listed unit of CNPC.
The official didn't identify the foreign companies.
Copyright (c) 2007 Dow Jones & Company, Inc.
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