Chinese energy giants join to exploit untapped oil, gas reserves at 81 sites

By Chi Jingyi Source:Global Times Published: 2019/7/9 21:58:40

Energy giants join to exploit untapped oil, gas reserves at 81 sites

Photo: VCG

Two Chinese state-owned energy giants have tied the knot to explore three oil and gas-rich basins in Western China on Monday, a move analysts say will increase oil and gas reserves and production to safeguard the nation's energy security.

China National Petroleum Corp (CNPC) and China Petrochemical Corp (Sinopec) will jointly conduct research and exploration in the Junggar Basin and Tarim Basin in Northwest China's Xinjiang Uyghur Autonomous Region and the Sichuan Basin in Southwest China. 

"This collaboration between CNPC and Sinopec will help increase oil and gas reserves, and ensure energy security," Han Wenke, an analyst from the Energy Research Institute under China's National Development and Reform Commission, told the Global Times on Tuesday.

The cooperation involves the exploration rights to 81 sites and covers an area of 305,800 square kilometers, CNPC said on its website.

"China imports a large amount of oil and gas every year, posing a threat to national energy security," Lin Boqiang, director of the China Center for Energy Economics Research at Xiamen University, told the Global Times on Tuesday.

In April, China imported 43.7 million tons of crude oil worth $14.4 billion, data from the General Administration of Customs showed. Natural gas imports reached 10.6 billion cubic meters in the month, up 12.2 percent year-on-year.

As China's dependence on fuel imports increases, there is more pressure on domestic production and storage facilities, Han said. 

"China's oil reserves are constant, which means there's not much space left to explore and produce. About 70 percent of the crude oil production relies on imports and 40 percent of natural gas is imported," Lin said. "But China has a huge amount of undeveloped gas reserves, for example, shale gas."

By the end of April 2018, China's proven reserves of shale gas had exceeded 1 trillion cubic meters, according to the China Mineral Resource Report 2018.

It is estimated that 3 billion cubic meters of shale gas is equivalent to burning 6 million tons of coal, reducing carbon dioxide emissions by 4.2 million tons.

"There isn't enough exploitation of gas reserves and the technology is not advanced," Lin added. "Major domestic oil companies have increased investment to seek technological breakthroughs in oil and gas exploration so they can vigorously enhance development and production."

The cooperation between the two energy giants can complement each other in terms of technology, and more importantly, avoid repeated development and reduce costs, Lin said. 

Customers can buy cheaper gas if CNPC and Sinopec can reduce the costs of exploration and extraction by upgrading their technologies under the joint research, Lin said.

Newspaper headline: Energy giants join to exploit untapped oil, gas reserves at 81 sites


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