The country should look increasingly offshore to shore up dwindling onshore production, oil companies were told on Monday, April 2.

"The current offshore oil and gas exploration and production should focus on the Bohai Bay basin and the Pearl River estuary as the top priority," Pan Jiping, a senior researcher with the Ministry of Land and Resources, said at China Offshore Summit 2007.

"As for deep-sea exploration, the firms should invest more in blocks in the northern part of the South China Sea," Pan said.

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More than 80 percent of China's proven offshore oil reserves are located in the Bohai Bay basin, and the country needs to beef up exploration in the Pearl River estuary, the South China Sea and the southern Yellow Sea, he said.

The southern Yellow Sea is the only offshore area where no major oil and gas reserves have been discovered so more efforts should be made there, Pan emphasized.

The ministry is expected to publish an appraisal of China's overall offshore fossil fuel reserves soon, giving more detailed guidelines to oil companies.

"We are also considering reforming the current project review and approval format to give more opportunities to international players. We may adopt more international practices, such as bidding, to allocate mining rights," Pan stressed.

He called on Chinese offshore companies to develop technologies for deep-sea oil and gas exploration.

Han Xuegong, a senior consultant with China National Petroleum Company (CNPC), the country's largest oil and gas producer, noted that given soaring energy demand and the decreasing production in oil fields located in the eastern part of the country, it is natural for national conglomerates to make more efforts offshore.

"It is true that developing offshore reserves involves higher risks and requires more investment and technical expertise. But given the current global oil prices, it is absolutely worth the risk.

"That is mainly why CNPC and China National Offshore Oil Corp (CNOOC) are marching offshore," Han said.

Both CNPC and China's top offshore oil company CNOOC announced yesterday that they are developing deep-water drilling platforms with a 3,000-meter extraction capacity.

Zhang Weiping, deputy chief economist of CNOOC, said that 70 percent of oil reserves in the South China Sea are in deep water, which require deep-sea drilling capacity.