Chinese oil major Sinopec announces oil and gas discovery

Chinese state oil and gas giant Sinopec has stocked oil and gas in a field in northwestern Xinjiang province, Reuters news agency reported. reports, adding that reserves in the field are estimated to be around 100 million tons.

This would be equivalent to approximately 733 million barrels based on a conversion ratio of 7.33 barrels per tonne.

The state-owned company said on Chinese social media that it had reached a daily output of more than 6,000 barrels of crude oil and nearly 600,000 cubic meters of natural gas.

The newly discovered field is located in a legacy producing region in the Tarim Basin. It is also the site of the Shunbei field, which produced about 1 million tons of crude oil last year, up 30 percent from the previous year, and 50 million cubic meters of gas, 32 percent more than the year before.

Local oil and gas production is prioritized by the Chinese authorities due to the country’s currently overwhelming reliance on imported fossil fuels. Last year, Chinese oil and gas importers had a field day with record low prices, but the defeat could not last forever and domestic production growth is once again high on the list of priorities. And state majors deliver.

Earlier this week, another Chinese energy giant, CNPC, announced a new discovery in the Daqing field cluster, one of the largest oil production centers in China. The new reservoir is located in a shale formation and is estimated to contain 1.27 billion tons of oil.

China has significant oil reserves, especially in shale formations. However, their geology is challenging, making the extraction of these resources a lot more expensive than in other places, such as the US shale plaster.

This discourages exploration and production companies from investing in new production because of the lower margins and uncertain results of exploration work.

By Charles Kennedy for Oilprice.com

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