china reports 3bln barrell oil discovery

This massive find is 'on trend' with Huskys massive gas find last year and very likely Nido and YGLs offshore Palawan blocks .....imo.
SALTY

Petrochina's huge oil find fuels confidence
China has shown encouraging exploration results recently
--------------------------------------------------------------------------------

May 05, 2007

PETROCHINA's oil discovery in China's Bohai Bay holds proven reserves of nearly 3 billion barrels, ranking it among the world's biggest finds this decade, according to its state-run parent firm.
Industry analysts said the field would probably produce only a quarter of that amount, but it will still be welcome news for the world's second-biggest oil consumer and a shot in the arm for Asia's largest listed oil producer, which has struggled to offset slowing output growth at ageing domestic wells.
China National Petroleum Corp (CNPC), whose listed arm flagged the find in March as China's largest in a decade, said that its Jidong Nanpu field contained proven reserves of 405.07 million tonnes of oil equivalent, or nearly 3 billion barrels.

Analysts compared the field to nearby Penglai, discovered by ConocoPhillips in 1999, which is expected to produce about 850 million barrels out of in-place reserves of 2.6 billion barrels following a nearly $US4 billion ($4.88 billion) investment. Andrew Hayman, an industry analyst at energy consultants IHS, said that according to Western standards, Jidong's commercially recoverable reserves would probably be nearer 650 million barrels, still making it a field with global scale.

"This field obviously will be a major asset to the Chinese economy given its proximity to domestic markets," he said. "And since it is located in 3 metres of water the costs of development and exploitation will be relatively cheap."

With recoverable reserves estimated at below 1 billion barrels, the field falls just short of recent giants being developed at offshore Angola, Brazil and the Gulf of Mexico, but rates favourably in Asia's more spartan oil patch.

CNPC said the find had total oil and gas reserves of 1 billion tonnes (7.3 billion barrels) of oil equivalent.

The shallow-water field is also important for PetroChina, the world's fifth-largest oil producer, lifting its proven reserves from more than 20 billion barrels at the end of 2006.

Analysts were awaiting more details on the development.

"It will depend on how soon PetroChina can put this oilfield into production. It usually takes at least two years," said Lawrence Lau, analyst with BOCI in Hong Kong.

"It depends also on PetroChina's determination, and how difficult it is in developing this field."

Hong Kong-based spokesman Mao Zefeng said PetroChina, which will operate the oilfield, will issue its own announcement soon.

Its shares gained 0.34 per cent on Thursday ahead of the statement.

PetroChina, which is targeting a 5.3 per cent rise in oil and gas output this year, is also due to unveil details of a potentially big gas find in the southwestern province of Sichuan.

Analysts say it is common for reserve figures released by Chinese state firms to appear inflated compared to those from Western companies, which use more rigorous standards when estimating how much oil can be economically produced at a field.

But the presence of such a large discovery in an already well-explored basin may give new hope for foreign explorers there such as US Anadarko, which has considered selling its China holdings as it seeks to reduce debt after several takeovers.

"The Bohai Bay is a relatively mature area and this new discovery is very encouraging," said Mark McCafferty, lead analyst for Southeast Asia at energy consultants Wood Mackenzie.

"I'm sure it is a big find, but exactly how big is uncertain as they tend to have a different methodology for reporting reserves in China."

Officials have said the Nanpu block is an extension into shallow waters from PetroChina's existing onshore field, where production has more than doubled in the past few years to the current rate of about 34,000 barrels a day. Output from China's biggest fields, such as PetroChina's own Daqing -- which accounts for nearly a quarter of China's production and has been pumping since 1960 -- is peaking, though officials hope to moderate declines during the next 15 years.

Flattening output growth of below 2 per cent a year has forced Beijing to raise crude oil imports to nearly half of its demand. Still the world's sixth-largest producer, China was a net oil exporter 15 years ago.

But China has shown encouraging exploration results recently, though mostly of natural gas rather than oil.

PetroChina's domestic rival Sinopec Corp, Asia's biggest refiner, last year announced the discovery of the Puguang gas field in Sichuan, among the country's five largest.

Canadian producer and refiner Husky Energy said it and partner CNOOC, the domestic offshore oil specialist, had discovered a giant gas field, marking China's first deep-water find.

Reuters