Shares in CNOOC Ltd, China's largest offshore oil producer, rose as much as 8.6 per cent after its Canadian partner found a natural gas field big enough to supply China for four years.
The discovery in the Pearl River Basin is "significant" and may contain 6 trillion cubic feet of gas, Husky Energy Inc, the Calgary-based company controlled by Hong Kong billionaire Li Ka-shing, said in a statement on Wednesday. That's equivalent to 7 per cent of China's current reserves or 1.1 million tons of oil.
"The project is significant for CNOOC and we expect more such gas discoveries as the company acquires oil assets overseas," said Liu Yang, who helps manage US$1.8 billion of Asian assets including CNOOC shares, at Atlantis Investment Management Ltd in Hong Kong.
China is stepping up drilling for natural gas and boosting imports of the fuel to curb pollution from coal-fired power stations. A decade of rampant expansion has left the country with six of the world's 10 most polluted cities. The government plans to overcome smog that reduces visibility in cities such as Beijing, the capital, before the 2008 Olympics.
The gas find in an area known as Block 29/26, 250 kilometres (155 miles) south of Hong Kong, is the first deepwater discovery off China's coast, Husky said. Hong Kong is a special administrative region of China, neighbouring Guangdong Province, the nation's manufacturing hub.
Under CNOOC's exploration contracts with foreign partners, the company has a right to acquire, at no cost, as much as 51 per cent of any discovery. CNOOC will exercise the option to take the 51 per cent stake, spokesman Xiao Zongwei said, declining to give details.
China's oil fields have failed to keep pace with demand, which more than doubled in a decade, accelerating the shift to gas. CNOOC in May took delivery of China's first cargo of liquefied natural gas from overseas. The supplies will supplement fuel transported 4,000 kilometres through PetroChina Co's West-to-East pipeline to the commercial centre of Shanghai in the east from Xinjiang in the northwest.