China National Petroleum Corp (CNPC), the nation's top oil producer, has won a 20 per cent stake in a joint oil and gas exploration project in Uzbekistan's Aral Sea, with four other regional oil companies.
The five partners, CNPC, Uzbekneftegaz, Korea National Oil Corp, Russia-based Lukoil and Petronas of Malaysia, signed a product-sharing contact last Thursday, Beijing-based CNPC announced on its website.
"Each of the five companies takes an equal stake in the contract," Liu Weijiang, a CNPC spokesman, told China Daily yesterday.
The partners plan to collect seismic data and drill two wildcat wells in the first three years, before establishing a joint firm to work on exploration.
Uzbekistan claims a 10,000-square-kilometre area in the Aral Sea, which is expected to have huge oil and gas reserves, CNPC said in the statement.
The joint contract comes after the Central Asian country's president Islam Karimov gave CNPC the go-ahead to look for oil and gas resources in five onshore blocks in Uzbekistan about 10 days ago.
CNPC and Uzbekneftegaz signed the exploration agreements for the five onshore blocks in June, after the two firms inked an initial accord for the deal during President Hu Jintao's visit to Uzbekistan in 2004.
According to the terms of the agreement, the two State-owned firms will gather two and three-dimensional seismic data and sink as many as 27 wells in the 34,000-sqare-kilometre region within five years, CNPC said.
CNPC's international business affiliate, China National Oil and Gas Exploration and Development Corporation, will be responsible for the specific operations of the two projects, said Liu.
The two deals in Uzbekistan mark another aggressive thrust for China into the Central Asian energy market, which is believed by industry analysts to potentially compete with the resource-abundant Middle East to meet surging oil and gas demand.
CNPC last year paid US$4.18 billion for PetroKazakhstan, which produces about 12 per cent of the crude in Kazakhstan.
PetroChina, the listed arm of CNPC, will seek further investment projects "in relevant countries," its Chief Financial Officer Wang Guoliang said two weeks ago in Hong Kong.
"The Uzbekistan projects will diversity China's oil imports, which now primarily rely on the Middle East," said Dong Xiucheng, a professor with the Beijing-based China University of Petroleum.
(China Daily 09/05/2006 page10)