CNPC ups overseas oil production
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China National Petroleum Corp (CNPC) said on Thursday that its average annual growth rate of overseas crude oil production reached 15.6 percent, with gas production at 21.3 percent during the past five years.
CNPC, China's biggest oil and gas producer, said in a statement on its website that overseas oil production is more than 10 million tons a year and the total length of its overseas oil and gas pipelines is 9,600 km.
"The increase in overseas oil and gas production proves that China has made some achievements in overseas resource exploration during recent years, but the percentage is not high within the context of the country's total energy consumption mix," said Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University.
Lin said it is also important to ascertain whether CNPC's externally produced oil products were sold in the region of origin, or transported back to China, as it is important to measure the contribution of the company's overseas business.
Zhou Dadi, former chief of the Energy Research Institute of the National Development and Reform Commission (NDRC), said CNPC's overseas development appears rapid because the business was only established a few years ago, and started from a low base.
"It is crucial to sustain the growth rate," he added.
Lin pointed out that it is also unclear whether CNPC makes a profit from its overseas business.
The NDRC said on Tuesday that domestic petroleum consumption reliant on imports is likely to reach 55 percent for 2010, compared with 53 percent in 2009. Oil supply security will become a more serious issue in the coming years, analysts said.
Lin said that faced with China's increasing reliance on energy imports, the nation's major oil companies should enhance their own exploration and production capacities in the international market.
CNPC has signed a Memorandum of Understanding with Saudi Aramco, the national oil company of Saudi Arabia, and the world's largest oil producer.
The two companies have agreed to expand crude oil trades and increase cooperation on a series of issues including refinery and petroleum engineering projects, and equipment supply.
The deal follows on from talks on oil trading and refining, the company said on Wednesday in a statement on its website.
Saudi Arabian Oil Minister Ali Al-Naimi said his government will provide "comprehensive" support for deals with CNPC.
Analysts said this cooperation is likely to be a good starting point for greater cooperation between the two countries.
China's demand for oil and gas is increasing rapidly, but its energy companies still lack experience in managing overseas projects when compared with international oil giants.
"We are seeking resources, and they (Saudi Aramco) need the large market in China so that they can become less dependent on (sales to) the United States. The opportunities are there for both sides," said Lin. "It will be a win-win situation."
He said the Saudi Aramco deal will definitely be beneficial for Chinese companies, as it will help them to develop both technological and management experience through international cooperation.
