| Sinopec Makes Oil Find in Xinjiang |
| Friday,June 01,2007 Posted: 06:16 BJT(2216 GMT) South China Morning Post |
China Petroleum & Chemical Corp, the nation's second-largest oil and gas producer, said it had made an oil discovery that analysts estimated could raise its reserves by between 4 and 15 per cent. It found the pool in a newly explored area of the company's Tahe oil field in Xinjiang, with the site covering 899.5 square kilometres. The geological reserves were estimated at 140 million tonnes to 200 million tonnes, company newsletter Sinopec News reported. That would translate into 1.02 billion to 1.47 billion barrels if all the crude can be pumped out. Analysts said the final proved reserves that could be booked were highly uncertain as more appraisal wells needed to be drilled to better ascertain the amount of economically recoverable reserves and subsequently proved reserves. Using an industry norm recovery rate of 30 per cent, CLSA director of China oil and gas Gordon Kwan estimated that 300 million to 500 million barrels might be recovered. This amounts to 9.4 per cent to 15 per cent of the company's 3.29 billion tonnes of proved oil reserves at the end of last year, based on its filing to the Securities Exchange Commission of the United States, where it is listed. However, he noted that the figures must be certified by a third-party international auditor and vetted by the SEC, probably by April next year at the soonest. Nomura Securities head of Asia oil and gas research Rachel Tsang Wai-ming had a more conservative take on the news. Ms Tsang said of the estimated economically recoverable reserves, only 40 per cent might qualify as proved reserves based on the SEC's definitions, according to past cases. This implies only 120 million barrels to 200 million barrels may be booked initially, or 3.6 per cent to 6 per cent of Sinopec's existing reserves, although more can be added in the longer term when further development work is done. A Sinopec spokesman was unavailable for comment. The firm did not say why it had only made the discovery now. But it comes as the three major mainland oil companies have been boosting spending and using new technology and methods to meet the country's rising demand. Higher oil prices have meant that previously uneconomic exploration is becoming viable. The new Tahe find comes shortly after rival PetroChina (SEHK: 0857, announcements, news) 's announcement of the largest recent oil discovery, in the Nanpu section of its Jidong oilfield in northeastern Bohai Bay. Nanpu is estimated to have 1.02 billion tonnes of geological oil reserves, of which 405.07 million tonnes can be economically extracted. Final proved reserves will be subject to the scrutiny of the National Reserves Audit Committee, as well as an independent audit based on standards set by the SEC. PetroChina chairman Jiang Jiemin said in March the company had also made what he believed would be the largest gas find in China, in Longgang, Sichuan, near another major discovery by Sinopec in Puguang, Sichuan. Puguang had National Reserves Audit Committee-appraised recoverable reserves of 356 billion cubic metres (bcm) at the end of last year, while Sinopec chairman Chen Tonghai expected it to rise to 550 bcm by the end of next year. Sinopec's H shares slipped 1.61 per cent yesterday to HK$7.95. |
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