CHINA'S second-largest oil and gas producer, Sinopec Corp, said it has found a field with as much as 1.5 billion barrels of oil in Xinjiang in the northwest, joining a slew of new discoveries this year in China.
The new field, in block 12 of the Tahe oilfield, covers around 900 square kilometers and holds geological reserves of up to 200 million tons of oil, or 1.47 billion barrels, Sinopec parent, China Petrochemical Corp, said yesterday.
Should 30 percent of the deposits be recoverable, the field's proven reserves could reach about 500 million barrels, boosting Sinopec's total oil reserves by 15 percent and net asset value by about five percent, according to Gordon Kwan, head of China oil and gas research at Hong Kong-based brokerage CLSA Ltd.
Kwan noted that before these volumes can be booked, more appraisal drilling will be required and they must be certified by third-party international audits and by the US Securities and Exchange Commission, probably by April 2008 at the soonest. Sinopec is listed in Shanghai, Hong Kong and New York.
Sinopec shares soared 3.29 percent to 13.5 yuan (US$1.77) in Shanghai yesterday, against a 6.5 percent drop in the benchmark Shanghai Composite Index after China tripled stamp duty on share trading.
Sinopec said it plans to have an annual output capacity of 11 million to 14.6 million barrels by drilling 90 to 120 wells in the new field.
The Tahe discovery is the latest energy discovery to be announced in China. A discovery made public early this month in northern Bohai Bay by PetroChina Co, the country's top oil and gas firm, holds geological reserve of 1.02 billion tons of oil equivalent. The government in Dazhou, Sichuan Province, announced over the weekend a natural gas deposit with 3.8 trillion cubic meters in total reserves.
"With breakthrough in technology, there will be a peak in energy discovery in China during the five years by 2010, benefiting PetroChina and Sinopec," China Merchants Securities Co analyst Qiu Xiaofeng said in a note this week. "For Sinopec, its total oil and gas reserves could at least double during the period."