China's oil majors are strengthening ties with foreign counterparts to tap domestic and overseas oil-gas reserves, in a move to meet the country's surging demand for energy.

China's largest oil and gas producer, China National Petroleum Corp (CNPC) and Europe's largest oil refiner Total SA, have agreed to develop a gas field in northwest China, and set up an oil and gas reserve exploration partnership in a third country.

The two oil giants on Wednesday signed two Memorandums of Understanding (MOUs) to scale up their footing in both markets through joint efforts, said a company statement on CNPC's website.

The Sino-French oil company alliance will work on the Sulige gas field, located in the Ordos Basin in northwest China, Liu Weijiang, CNPC spokesman for overseas business on Friday confirmed to China Daily, but did not elaborate on the overseas assets that the two oil firms are eyeing.

Industry sources said the Sulige field has gas reserves of up to 602.6 billion cubic meters.

"It is only a set of framework agreements, and more follow-up projects are still under discussion," Liu said on Friday.

"The partnership with Total marks a significant advance for CNPC in forging strategic relations with foreign oil conglomerates and expanding business," the CNPC statement said.

According to the statement, the partnership allows the companies to complement each other and sharpen their competitive edge. CNPC will benefit from improved corporate management and technology, while Total aims to increase its market share.

China, the world's fastest-growing major economy, relies on imports for almost 40 percent of its oil demand. Industry analysts forecast that proportion will increase beyond 50 percent by 2020.

The government has also set an ambitious target of accelerating natural gas use. It plans for natural gas to supply 8 percent of the nation's energy needs by 2010 from the current 3 percent.

Such a huge demand potential has lured an increasing number of energy giants from both China and abroad to cash in on the business.

CNPC's deal came shortly after the nation's third largest oil producer, China National Offshore Oil Corp (CNOOC) signed similar MOUs with Thai oil companies to expand business in both the Thai market and overseas fields, last week.

CNOOC has agreed with Thailand-based PTT Public Company Ltd and PTT Exploration and Production, the two dominant companies in the Southeast Asian country's oil market, to explore and produce oil-gas products both in Thailand and abroad. The two sides also aim to find new potential for old fields in Thailand, a company statement said.

A CNOOC spokesman on Friday told China Daily the company plans to double oil production over the next five years.

(China Daily October 1, 2005)