Beijing to import more foreign oil

Beijing to import more foreign oil

BEIJING (UPI): Energy ravenous China announced Saturday it
will import more foreign oil to cope with soaring demand in the
rapidly modernizing country exhausting its reserves in 20 years.

Refineries under the state-run China Petrochemical Corporation
processed 20 million tons of imported oil in the past year and
anticipate more in 1997, said President Sheng Huaren.

With a population of 1.2 billion, China has one of the world's
lowest levels of mineral resources per capita. It has been forced
to import growing amounts of crude oil to fuel its rapid
expansion because of stagnating production at home.

"The 20 million tons made up 20 percent of the total amount
processed," Sheng said.

"The soaring need for finished oil and a relatively stable
supply of onshore oil have forced refineries to look into
overseas markets," Sheng acknowledged.

Much to the chagrin of the United States, China has long been
holding discussions with Iraq to cooperate in seismic studies and
exploration in Iraqi oilfields.

Under strict U.N. sanctions since the 1990 invasion of Kuwait,
Iraq was formally given permission in August to sell d2 billion
worth of oil every six months to buy food and medicine.

China is emerging as an important player in international
crude oil exploration, having signed last year a cooperation
agreement with Nigeria.

Chinese oil and related state companies have stakes in
oilfields in Malaysia and Indonesia. Africa's rich resources have
also been targeted as a possibility because the continent has not
yet been dominated by Western powers.

Official figures published in the China Daily showed oil
production in China stood at an average of 3 million barrels per
day in 1995, and is expected to reach 3.3 million barrels per day
by 2000, while demand reaches 3.04 million barrels per day.

Industry experts predict the figure will reach 3.9 million
barrels per day by the turn of the century.

A net importer of oil since late 1993, China imported 18.4
million tons during the first 10 months of 1996, up 63 percent
from the previous year.

China has been urging foreign-funded exploration in the
northwestern Xinjiang region as major fields in the north and
east have peaked. Among the oil giants which have signed
contracts to explore and tap the Tarim Basin, the foreboding
desert believed to hold reserves equal to Saudi Arabia, are
Texaco and Italy's Agip Petroli.

But foreign firms eager for a slice of the potentially huge
Chinese oil market have been disappointed by Beijing's delays in
allowing them to sell domestically

Five foreign companies -- Arco, Caltex, Amoco, Exxon and Saudi
Aramco, have Been involved in plans to upgrade refineries, but
sources said progress has been slow due to the difficulty in
agreeing in terms with Chinese refiners.

Beijing has acknowledged its proved reserves amount to only 5
billion tons, of which 2.8 billion have been exploited. With the
present annual exploitation rate of 104 million tons, the reserve
will be exhausted in two decades.

The scenario has prompted China to speed up its exploration of
natural gas which can be exploited for another 40 to 80 years.

A senior official with the China National Petroleum Corp.,
which supervises onshore oil operations, said the country plans
to double its annual natural gas production capacity to 30
billion cubic meters by 2005.

He said China is expected to verify additional onshore
reserves of 1,000 billion cubic meters by the end of the century.