After seeing profits surge in 2006, China's top three oil and gas suppliers
are planning to increase production to meet mounting domestic demand.
"I can assure you that the huge profit we collected last year and in the
years before will be reinvested in exploration and production, to pump enough
oil and gas for local consumption," Jiang Jiemin, vice-chairman and president of
China National Petroleum Corp (CNPC)'s listed arm PetroChina said on Friday.
"We will not spend the money elsewhere. In fact, we plan to inject around 250
billion more yuan into oil and gas production and refining this year."
CNPC is China's largest oil and gas producer, with sales hitting 800 billion
yuan last year.
Thanks to the surging global oil price and measures to trim costs, China's
leading oil producers' upstream business boasted high profits in 2006.
PetroChina's profit for 2006 reached 185 billion yuan, with offshore oil company
CNOOC's net income being 32.8 billion yuan, according to the heads of the two
Wang Tianpu, president of Sinopec Group's overseas-listed unit Sinopec, did
not release last year's profit, only revealing that the firm's industrial output
hit 100 billion yuan in 2006.
PetroChina's crude oil output amounted to 106.6 million tons last year. With
more investment for this year, Jiang is confident to more than meet local
On gas supply, Jiang is also upbeat about bringing more natural gas from
Russia, saying the price is the only obstacle to a final agreement. The
PetroChina head's target is to import 68 billion cubic meters (bcm) of gas from
Russia every year.
"Negotiations are still going on with two pipelines East and West on the
agenda. I am confident positive results will arise from the negotiation," said
Media reports implied last year that CNPC was close to sealing a deal with
Moscow-based Gazprom to build two pipelines to transport up to 68 bcm gas from
Russia to China annually. The western line, from Russia's West Siberia to
China's Xinjiang Uygur Autonomous Region would reportedly connect with China's
West-East Gas Pipeline.
The West-East Gas Pipeline, put into commercial operation at the end of 2004,
pipes natural gas from resource-rich western China to the energy-thirsty east.
With ambitious production plans, CNPC has expressed its desire to list in the
mainland stock market. "As Asia's most profitable listed company, we hope to
list on the A-shares market. The move is also in line with our interests in the
long run, since the bulk of our business is in China and we need local support,"
Sinopec, Asia's largest refiner, also expects to extract more oil and gas
next year by increasing investment in upstream operations.
The move is designed to meet rising domestic energy demand and to cover
losses from oil refining.
The efforts to strengthen its upstream operations also involve overseas
exploration and production projects, and breakthroughs are expected in overseas
markets, Chen Tonghai, chairman of Sinopec Group, was quoted by Shanghai
Securities News saying on Thursday.
"Our overseas exploration operations are expected to produce, first of all,
more resources and secondly, high profits.
"The Middle East, South America, Africa and Central Asia are our priorities
overseas," Sinopec President Wang said.
He said collaboration is needed between the three energy giants, CNPC,
Sinopec Group and CNOOC, to explore more overseas oil and gas markets.
Sinopec Group said on its website it would produce 1.9 percent more crude oil
and 11 percent more gas this year to meet the rising energy demand.
CNOOC's Iranian talks
China National Offshore Oil Corp, known as CNOOC, confirmed on Friday that it
was in intense negotiations with its Iranian counterpart, hoping to tap a
gigantic gas field in Iran.
CNOOC Chairman Fu Chengyu refused to elaborate on the potential deal, only
releasing exclusively to China Daily that most details reported so far, such as
investment figures, are incorrect.
According to Iran Daily, the National Iranian Oil Company and CNOOC penned a
memorandum of understanding on the exploration and liquefaction of the North
Pars gas field late last year.
As China's top offshore oil and gas producer, CNOOC hopes to ship up to 25
million tons of liquefied natural gas (LNG) to China annually by 2010.
Fu said he was optimistic about the goal thanks to the company's local and
overseas exploration efforts. "We believe our accumulated efforts will
eventually pay off," he said.
China is committed to raising the ratio of natural gas in its total energy
consumption from the current 3 to 5 percent to between 8 and 10 percent by 2010.
CNOOC plans to build as many as seven LNG-importing terminals in six
provinces and municipalities. By the end of October 2006, two of them had
obtained government approval.