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China becomes world's fifth largest oil producer

Asia Times, 11 September 1999

BEIJING - China produced only 120,000 tons of crude oil when the People's Republic of China was founded in 1949 and was regarded as a country with poor oil resources. Fifty years later, it is the world's fifth-largest oil producer, turning out an annual oil output of 164 million tons.

Before 1949, the nation had three oilfields. Now there are 460, plus 350 gasfields in 25 provinces and autonomous regions as well as in Bohai Bay, the East China Sea and the South China Sea, according to the China National Petroleum Corp (CNPC).

China has turned out a total of 3.5 billion tons of crude and 400 billion cubic meters of gas over the past 50 years. The country's oil, gas and refining production capacities have reached 168 million tons, 25 billion cubic meters and 250 million tons, respectively.

Petroleum and gas use now account for over 20 percent of China 's energy consumption, compared to merely 0.07 percent in 1949, the CNPC source said.

China has built 20,000 kilometers of pipeline, including more than 10,000 kilometers of oil pipeline and 9,100 kilometers of gas pipeline, which transport some 71.5 percent of the country's crude oil.

China's oil sector started from scratch when the country's first large-sized oilfield was discovered in Karamay, in northwest China's Xinjiang Uygur Autonomous Region, in 1956. Since 1959, a large group of major oilfields, including Daqing, Shengli and Dagang, have been found in succession in China.

The country's total oil output increased at an annual average rate of 23 percent during the first three decades after 1949. And in 1978 China became the world's eighth largest oil producer, producing 100 million tons.

Since China adopted a reform and opening-up policy in 1978, the country's oil sector has soared to a new level. Between 1978 and 1998, China invested 258.7 billion yuan ($31.7 billion) to develop its oil and gas industry, as compared to 7.16 billion yuan between 1949 and 1978.

Investment in oil and gas exploration has increased at an annual average 11.1 percent over the past 20 years. Official statistics show that the Daqing Oilfield has maintained an annual output of more than 50 million tons for 24 consecutive years. Other newly-developed oilfields such as Tarim and Turpan-Hami have also shown steady growth in the past 20 years, providing additional oil and gas reserves topping one billion tons and one trillion cubic meters, respectively.

Meanwhile, long-distance gas pipelines linking Beijing, Xi'an, Sichuan and the Shaanxi-Gansu-Ningxia region have emerged, which ensures gas supply in energy-short cities. China has readjusted its oil industrial system since it adopted the reform and opening policy, exemplified by the introduction of the public bidding system in the 1980s.

In 1998, China reshaped its oil and petrochemical industry by reorganizing two major group enterprises, the CNPC and Sinopec, in a bid to integrate upstream with downstream production.

CNPC has so far signed 47 contracts with 44 overseas oil companies, attracting foreign investment worth more than $1 billion.

Moreover, the China National Offshore Oil Corp (CNOOC) has signed more than 130 exploration contracts with 70 foreign oil companies from 18 countries and regions, absorbing nearly $7 billion in foreign investment.

Through Sino-foreign cooperation, China has drilled around 400 oil wells and found over 100 oil-bearing structures in its coastal waters.

More significantly, China has successfully squeezed into the international oil markets amid fierce competition, and has undertaken a large group of oil projects in Sudan, Venezuela, Kazakhstan, Peru and Canada.

(Asia Pulse/XIC)