SHANGHAI - Sinopec International Exploration and Production Corp (SIPC) will produce half of its oil from offshore operations by 2015, as the foreign arm of China Petroleum & Chemical Corp (Sinopec) plans to go deeper into the ocean for its largely untapped oil reserves, a top company executive said.
At the Third Deepwater Asia Congress 2011 in Shanghai on Wednesday, Zhang Zhigang, senior manager of the engineering department of SIPC, said the company has made plans to more than double its annual oil production to 43 million tons by 2015. That means 21.5 million tons of oil will be produced offshore.
SIPC is Sinopec's wholly owned subsidiary that carries out external upstream oil and gas cooperation on behalf of the group.
Last year, about 37 percent, or 6.77 million tons, of SIPC's 18.40-million-ton oil production came from offshore operations.
The plan to boost offshore oil production was made after SIPC's offshore operations grew rapidly over the last five years.
Its offshore production took off in 2006 and reached 6.77 million tons in 2010.
"After gaining experience over the last decade, we feel the timing is right for us to accelerate our offshore oil exploration and production. It's an area that major oil producers worldwide are looking at," Zhang said.
SIPC's move to offshore oil production joins other major oil producers worldwide, which are increasingly turning to the ocean to increase production as oil reserves onshore are in danger of drying up after decades of exploration and production.
More than 70 percent of the world's oil reserves lie beneath the ocean while a mere 33 percent of global oil production came from operations offshore in 2009, spelling a great potential for offshore oil production, said Wang Pinxian, president of the Chinese Committee on Ocean Research, at a conference in July.
According to data from Cambridge Energy Research Associates, a US-based consulting firm, offshore oil will account for 35 percent of global oil production by 2020.
During the same deepwater congress in Shanghai on Wednesday, Petroleo Brasileiro SA, the biggest oil producer in Latin America by market capitalization, said it will invest $224.1 billion by 2014 to raise its offshore oil and gas production to 5.38 million barrels a day by 2020, up from 2.58 million in 2010.
To enlarge its offshore operations, Petroleo Brasileiro said it will add a total of 49 drilling units, 250 supply vessels and 43 production platforms by 2020.
For SIPC, a 4.5-billion-yuan deal has been signed to buy stakes in Chevron Corporation's three deepwater oil blocks in Indonesia. The deal is waiting for approvals from local regulators.
However, Zhang said that SIPC faces obstacles in talents, technologies and experience to conduct offshore drilling, especially in deep water.
"It has not been long since we started offshore operations. So, in some cases, we will cooperate with other producers to jointly explore deepwater oil and gas projects," Wang said.