Private firms may get chance to bid on oil blocks
Updated: 2006-10-09 15:15 BEIJING, Oct. 9 -- China is
considering opening oil exploration blocks in its smaller basins to private
domestic private companies in what could be the first step toward introducing
competition in the country's highly regulated upstream energy market.
The Ministry of Land and Resources plans to develop a bidding system for
exploration rights in small and mid-sized basins over the next five to 10 years,
the China Oil News reported on its website on Sunday.
Trial bidding is expected to start in three to five years, the report said,
citing Che Changbo, deputy chief of the Oil and Gas Resources Strategic Research
Center under the land ministry.
China now grants oil and gas exploration and exploitation licenses to three
state-owned energy giants, China National Petroleum Corp, Sinopec Group and
China National Offshore Oil Corp, as well as provincial government-run Shaanxi
Yanchang Petroleum Group Co.
Che, speaking to an energy forum in Beijing on Friday, said China should
allow Chinese companies under all types of ownership to access the upstream
energy market provided they meet requirements in capital and expertise.
"The big state trio should still play the dominant role in domestic energy
exploration and production sector by controlling more than 85 percent of the
country's total oil and gas reserves and output (in the future)," Che said.
China's onshore and offshore oil basins cover 5.5 million to 6 million square
kilometers, and the big three and Yanchang have already registered for the
rights to explore 4.38 million square meters, according to the ministry.
Che said the blocks to be open will be those that are unregistered at
Small local companies that have cooperation projects with the state big names
can also apply to obtain exploration rights.
The reform in the upstream market will encourage the transfer of exploration
rights among qualified companies, said China Oil News, which is a publication
In July, PetroChina Co, which is CNPC's listed unit, said it will open nine
exploration blocks in Tarim Basin in the northwestern Xinjiang Uygur Autonomous
Region to foreign investors.