Discovery of the Jidong Nanpu Oilfield can, to some extent, relieve pressure on energy shortage and strengthen confidence in oilfield exploration, but it cannot reverse the imbalance between energy supply and demand in China, said Wang Zhen.

In Wang’s opinion, since China is still facing an energy shortage, the government should not and will not change the present policy focusing on saving energy and improving energy utilization efficiency.

Xia Yishan, an expert with the National Energy Leading Group, said that the crucial issue for Chinese energy security is the sharp imbalance between growing energy demand and shrinking resource reserves.

According to Xia, as the Chinese economy sustains rapid growth, the huge energy demands and inefficient domestic supplies increase risks, inevitably pressuring national energy security. Therefore saving energy, improving energy efficiency and developing alternative and clean energy still remain at the core of China's energy strategy.

Li Runsheng, a CNPC spokesman, says that the newly found Nanpu Oilfield will mainly be used to stabilize the market in east China. The majority of Chinese energy consumption occurs in this region, an area faced with the greatest consumption and demand pressures.

Green efforts

CNPC announced that mass exploitation of Jidong Nanpu oilfield will begin in 2008. According to CNPC plans, up to 2012, the annual production capacity will reach 10 million tons, of which 7 million tons are from offshore exploitation and 3 million tons are from land exploitation.

Jia Chengzao, Vice President of PetroChina, said that in China, land oilfields need 3.2-3.5 billion yuan ($1 = 7.7 yuan) of investment for every 1 million tons of annual production capacity. With the Nanpu Oilfield, the investment is only 2.3-2.5 billion yuan. Moreover, the exploiting cost of the oilfield is only $0.59 per barrel, much lower than the international average of $1.2-1.5 per barrel. Therefore the Jidong Nanpu Oilfield will be one of low cost and high economic returns.

“From 2008 on, the output of the oilfield will grow by 1 million tons every year,” said Jia.

According to Hu Wenrui, the goal for the first stage of development is to produce 10 million tons until 2012. If 2.5 percent of the oil deposit is exploited every year, the oilfield can last for at least 50 years.

The CNPC has also decided to adopt the most advanced technologies in exploiting Nanpu Oilfield, aiming to use technologies that will still be considered advanced 10 years down later.

The CNPC will also adhere to the principle of sustainable development when exploitating the Jidong Nanpu Oilfield. “Nanpu oilfield won’t be overexploited,” Hu said. “We must make scientific planning and keep sustainable exploitation.”

At the May 7 press conference, Hu Wenrui said that the CNPC had established the idea of “developing the oilfield and protecting the sea,” deciding to construct the Nanpu Oilfield as the first “green oilfield” in China. Hu pledged that it would be safe, environmentally friendly, energy efficient and low emission based. Hu hopes the oilfield can realize zero pollution and low emissions, so as not to burden the environment on land or in the sea.

The CNPC says that it will implement scientific concepts of development for the new oilfield, transform the economic growth pattern, adopt advanced technologies, pay attention to safe and clean production and protect the marine ecological environment.

Foreign companies miss out

The 1.02 billion tons of oil discovered at the oilfield are equal to about 7.35 billion barrels. This must be sad news for Kerr-McGee Corp. from the United States and Agip from Italy, who both missed the large deposit in prior explorations.

The Bohai Bay basin has the most concentrated oil and gas recources in China and is an important production base for crude oil and natural gas. In 40 years of exploration, seven oilfields have been found in the Bohai Bay, including the Shengli Oilfield and Liaohe Oilfield, with combined crude oil output hitting 69.79 million tons in 2006. Among the seven oilfields, the Jidong Oilfield has the smallest area and output.

In 1992, prospecting began in Nanpu, but progress did not go smoothly.

In July 1995, CNPC signed a risk exploration contract with Kerr-McGee Corp. to prospect in two areas of Jidong beach, including Nanpu. After drilling two wells and finding no oil or gas, Kerr-McGee Corp. withdrew.

In November 1997, CNPC signed another risk exploration contract with Agip, who drilled a well and withdrew after finding no oil or gas.

In fact, the well where oil was found is nearly in the same location as the wells drilled by the two foreign companies. Experts say this is because the foreign companies aimed at deep-layer oil, while this discovery is in a shallow or mid-level layer.