China's three biggest oil companies are expanding their scopes of business in
oil exploration in the country, breaking a de-facto monopoly over offshore oil
prospecting and production.
China's Ministry of Land and Resources, which oversees resources exploration
in the country, issued a license on July 6 to PetroChina Company Ltd for
offshore oil exploration in the country, a move described by experts as a
landmark event, The Economic Observer reported on Monday.
PetroChina, the country's biggest oil producer, has so
far confined its oil-related activities to the land, although it is not legally
bound.
But experts acknowledged that the license is regarded as a landmark for the
company, which would break the de-facto monopoly of China National Offshore Oil
Corp. (CNOOC) over offshore oil prospecting and production.
CNOOC which has been China's only major offshore oil exploring and producing
firm, had also confined to its oil-related activities to offshore oil
exploration and production, though it is not legally required to do so.
Pan Xinchun, deputy director of the National Bureau of Oceanography under the
ministry, was quoted by the newspaper as confirming the report on July 8.
Experts say PetroChina's expansion of its scope of business to offshore oil
exploration and production was a move to prop up its oil output.
PetroChina, who also operates China's biggest oil field Daqing Oilfield, has
found itself in a difficult position as oil output from Daqing is decreasing
after decades of oil extracting. Daqing Oilfield in northeast China accounts for
40 percent of the company's total output.
CNOOC, meanwhile, has recently struck a deal with the Inner Mongolia
Autonomous Regional government on the CNOOC'S taking over of the Tianye Chemical
Group, whose predecessor is Inner Mongolia Chemical Fertilizer, whose assets
totaled some 4 billion yuan (US$500 million), according to the report.
The report noted that CNOOC may intend to be involved in mining the country's
biggest natural gas field, which has been mined by the Changqing Oilfield under
PetroChina, and extract oil.
Sinopec, the country's biggest oil refining and petrochemical company, is
also submitting an application for offshore oil exploration and production in
South China Sea, East Sea China and Bohai Sea, according to the newspaper
report.
Experts say the expansion of business of the three oil and petrochemical
giants was market driven, and the move is what the Chinese central government
hoped for in a bid to improve efficiency and increase competition between the
three giants, all State-owned, for increased oil output to power the country's
rapidly growing economy.
China has become a net oil importer in the past decade, importing 91.12
million tons of crude and 28.24 million tons of refined oil in 2003, and experts
estimated China's crude oil imports might exceed 100 million tons this
year.
