By an OGJ Online Correspondent
BEIJING, Feb. 9�China Petroleum Corp. (Sinopec) and China National Offshore Oil Corp. plan to establish a joint management committee to supervise exploration and production activity in the East China Sea.
CNOOC CEO Fu Chengyu said Sinopec and CNOOC will each have a 50% stake in the oil and gas reserves and share operatorship in East China Sea.
Sinopec conducts E&D in the area through unit Sinopec Star Petroleum Co. Ltd. Sinopec Star has combined proven oil and gas reserves of 425 million tonnes of oil equivalent, of which 20% is in the East China Sea.
Sinopec unit China Petroleum & Chemical Corp., which is listed in Hong Kong and New York Stock Exchanges, is expected to buy Sinopec Star's upstream assets some time this year. The company will appoint a third party to assess those assets the sale.
Both companies are conducting oil and gas exploration in the East China Sea. Sinopec is more involved in exploration while CNOOC focuses more on production.
To date, Sinopec Star has discovered 200 billion cu m (bcm) of gas reserves in the East China Sea, including 54 bcm of gas reserves at Chunxiao prospect at the Xihu sag.
The company drilled five development wells at the Xihu sag last year, with three flowing natural gas of industrial value.
One of the wells, Chunxiao-3, flowed 1.43 million cu m/day of gas and 880,000 cu m/day of condensate.
Chunxiao is expected to come on stream in 2004, with initial gas production estimated at 2 bcm a year, expandable to 8 bcm/year by 2010.
In addition to East China Sea, Sinopec Star is also operating in China�s Xinjiang in the northwest, Sichuan province in the southwest, Jilin province in the northeast, and Jiangsu in the east.
In 2000, Sinopec Star raised its production to 2.5 million tonnes, up 62% over 1999.
Last year, Sinopec Star drilled seven oil and gas wells at Tahe in Tarim basin in Xinjiang. The company has established 2.15 million tonnes/year of crude oil production capacity at Tahe, which has an estimated 22.13 million tonnes of recoverable crude reserves; the basin has 159.1 million tonnes of proven reserves.
Also last year in the northwest, Sinopec Star said it discovered 16.4 bcm of natural gas reserves in an area of 155 sq km at Ordos basin.
In 2000, Sinopec Star drilled 81 exploration wells. Fifty-one wells had oil and gas flows. The company said those finds led to the discovery of 53.76 million tonnes of crude reserves and 73 bcm of gas reserves.
The company will add 88.5 million tonnes of oil equivalent in oil and gas reserves this year in order to raise its oil and gas production capacity by 1.61 million tonnes of oil equivalent.
The company is also targeting to raise its net profit by 38% in 2001 to 300 million yuan.