Others News
- Firms double spending on oil hunt
Date: 31-Jul-2007 Sources: (Shenzhen Daily)
DOMESTIC firms have doubled spending on their domestic oil and gas hunt over the past two years, but the world's second-largest oil consumer may only maintain long-term oil production, an energy consultancy said yesterday.
Wood Mackenzie said Chinese national firms such as PetroChina Co., Sinopec Corp. and China National Offshore Oil Corp. (CNOOC) increased spending on domestic exploration and development to US$21.5 billion in 2006.
The US$8.9 billion increase in domestic investment over the last two years was greater than China's total international expenditure in 2006, including acquisitions, the consultancy said in a report.
'Each company is now investing at a greater rate than most of the major international oil companies,'said Norman Valentine, senior corporate analyst for Wood Mackenzie.
Many oil companies say that despite the multi-year rally in crude futures prices, which increases the incentive to search for energy, costs for oil services such as drilling rigs have also boomed to limit the potential gains.
China has to some extent been sheltered from the full impact of inflation in upstream capital costs, due to the lower costs of domestically sourced labor and materials, the U.K.-based consultancy said.
The Chinese efforts have paid off, it added, pointing to PetroChina's Bohai Bay discovery, one of the world's biggest finds this decade, and Sinopec's Puguang gas field, expected to pump the equivalent of a quarter of last year's output by 2009.
But the consultancy said these discoveries are likely to maintain China's long-term production levels rather than substantially increase overall domestic oil supply. It said the impact on gas over the next five to 10 years is potentially more dramatic with knock-on effects for the global gas market.
PetroChina still lagged forecasts with a 3.7 percent rise in quarterly oil and gas output to 275.1 million barrels of oil equivalent, while Sinopec pumped 2.1 percent more oil in the first half of this year.
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