CNOOC Ltd, China's biggest offshore oil producer, plans to more than double production at the Bohai Bay field to more than 27 million metric tons, or about 542,000 barrels a day, in five to six years as new fields come on stream.
"We are confident that Bohai Bay will overtake Shengli oilfield to become China's second-largest," CNOOC Vice President Chen Bi, who's also in charge of the Bohai field, told reporters in Tianjin.
China, the world's second-biggest energy user, is encouraging its oil and gas producers to step up production to meet rising consumption spurred by an economy that surged 11.9 percent in the second quarter. The nation's oil demand will increase 5.9 percent to 7.6 million barrels a day this year, the International Energy Agency said in its September forecast.
"Bohai Bay area has large reserves," Grace Liu, an oil analyst at Guotai Jun'an Securities Hong Kong Ltd, told Bloomberg News. "There's great potential to increase output in Bohai Bay."
Production from Bohai Bay in northeast China reached the equivalent of 269,126 barrels a day last year, or 39 percent of CNOOC's production, Chen said. The field has net proven reserves equivalent to 1.1 billion barrels, which is 60 percent of CNOOC's total, he said.
CNOOC shares rose yesterday as much as HK$1.32, or 9.8 percent, to HK$14.86 (US$1.90). The stock has almost doubled this year, more than the 45-percent increase in the benchmark Hang Seng Index.
China Petroleum & Chemical Corp's Shengli oilfield increased output 1.7 percent last year to 27.4 million tons, the company's newsletter, Sinopecnews, said in January. PetroChina Co's Daqing oilfield, the nation's largest, pumped 43.4 million tons last year.
The Bohai oilfield has 2.14 million cubic meters of proven original oil in place, said Xue Yong'an, manager of the exploration department at CNOOC Ltd Tianjin, the unit in charge of Bohai Bay. It has recoverable reserves of 3.7 billion barrels and a reserve recovery rate of 20 percent, he said.
Bohai Bay has 28 oilfields and 60 platforms in production, Chen said. The company operates six floating production storage and offloading units in the area, he said.
"Bohai Bay has great growth potential," CNOOC Chief Financial Officer Yang Hua said last week. "The water is relatively shallow in the area and production costs are relatively lower."
There are 12 fields and 13 platforms under development in Bohai Bay, Gao Dongsheng, general manager of the development department of CNOOC Ltd Tianjin said. There are 13 fields and 18 platforms planned, he said.
CNOOC made seven oil and gas finds in the first half of this year. The Jinzhou 25-1 field in Bohai Bay is a "significant discovery," Yang said in August.
Appraisal work for the Jinzhou 25-1 field was finished in September and reserves will be assessed by the end of this year. CNOOC plans to complete development planning of the field by March 2008, Gao said.