China's largest oilfield, Daqing, will keep output stable over the next two years by suspending a production reduction scheme.

Officials in Daqing said that the new strategy was based on the anticipation of potential new reserves in surrounding basins.

An increase in natural gas production may also offset the decrease in oil production, the officials said.

Daqing accounts for one-third of China's total oil output, and was planning to cut its oil output by an annual 7 per cent over the next seven years, in a bid to prolong its life span.

The Northeast-based field pumped more than 50 million tons of oil annually for 27 years until it reduced production to 48.4 million tons last year. Oil output will drop to 46.4 million tons this year.

"We would like to end the strategic (production) adjustment in a year or two, so as to stabilize the production at a certain level," Wang Yupu, Daqing oilfield general manager, told China Central Television.

"(We will) produce as much oil and gas as possible," he pledged.

Wang did not reveal what level the production would be maintained at, adding that this would be decided after more detailed research had been conducted.

The Daqing oilfield spokesman was unavailable for comment.

A manager of the planning department at Daqing Petroleum Administration Bureau, an affiliated subsidiary of the oilfield, said Daqing revised the production plan late last month after China National Petroleum Corporation (CNPC) Vice-President Jiang Jiemin paid a visit. Jiang took up his position in May in a management reshuffle at CNPC, which owns the Daqing oilfield, after former president Ma Fucai resigned over a deadly gas blast.

Jiang believed that there is potential for new discoveries in nearby basins, according to the manager.

And increased natural gas production will also be regarded as additional oil production, said the manager who spoke on the condition of anonymity. 1,000 cubic metres of natural gas is roughly equivalent to one ton of oil.

"It is possible for us to make the cake bigger to maintain production," said the manager.

Daqing has been stepping up efforts to explore nearby basins for new reserves. The company had earlier said it made a significant finding in the Haila'er Basin in the Inner Mongolia Autonomous Region. The new reserve is likely to pump 1 million tons of oil annually by 2005.

Daqing plans to add another 500 million tons of proven oil reserves and 100 billion cubic metres of natural gas reserves over the next few years.

Hu Jie, an engineer with a exploration research institution of CNPC, said it is also possible for Daqing to increase its reserves by further tapping existing production areas.

Research shows that more than 80 per cent of new reserves in the United States discovered over the past 50 years were found in existing blocks, according to Hu.

Daqing's oil and gas production remained flat in the first half of this year compared to the same period in 2003. Oil production reached 23.4 million tons, while natural gas output remained at 1.029 billion cubic metres.

(China Daily July 19, 2004)