With the soaring oil price on the world market and a growing demand at the domestic market, China's oil producers have been working hard to increase the output capacity. China reported the crude oil output growth of 180,000 barrels per day in the first quarter of 2005.

According to statistics released by the China Petroleum and Chemical Industry Association, China saw a crude oil output of 44.731 million tons in the first quarter of 2005, increasing by 180, 000 barrels daily over the same 2004 period to nearly 3.67 million barrels per day, with a growth rate of 5 percent.

"It means China's crude oil output in the first quarter grew by over two million tons year-on-year. Such a growth rate is rare in the recent years," said Shan Weiguo, director of petroleum economic and technological research center of the China National Petroleum Corporation (CNPC), the country's biggest oil producer.

According to Shan, China's oil output has kept an annual growth of only tens of thousands of barrels per day in the past decade.

The quarterly report released by PetroChina Company Ltd. of CNPC, in the first quarter of 2005, shows that the company reported an oil and natural gas output of 243.4 million barrels per day, or 14.30 million barrels more than in the same period of 2004 with a year-on-year growth of 6.2 percent.

Crude oil output of PetroChina in the first quarter of 2005 reached 199 million barrels, 7 million barrels more than in the same period of last year. Crude oil price rose by 32.9 percent year-on- year to US$37.63 per barrel.

Sources from the PetroChina said the output growth is the highest since CNPC's listing in Hong Kong.

China's oil output growth in the first quarter is mainly from the oilfields in West China and China's offshore regions.

Take an example of the Changqing oilfield in west China's Shaanxi Province. Belonging to the CNPC, the oilfield claimed a sharp output rise of 31 percent based on the growth of 16.77 percent of last year to 215,000 barrels per day.

Compared with land oilfields, China's offshore oilfields boast a double digits growth in the first quarter of 2005.

According to quarterly report from by China National Offshore Oil Corporation (CNOOC), China' biggest offshore oil producer, the daily net oil and natural gas output of CNOOC Ltd. reached 411,424 barrels per day with a year-on-year growth of 13.4 percent. The average daily output of crude and condensed oil is 351,579 barrels, growing 14.5 percent over the same period of last year.

Xiao Zongwei, spokesman for the CNOOC Ltd., confirmed that CNOOC's most output growth is from its newly completed projects in Bohai Bay and South China Sea.

The six oilfields put into production in the later half of 2004 contributed a lot to the rapid growth of CNOOC's output in the first quarter, acknowledged Xiao.

With the nine projects that are going to be put into operation this year, CNOOC expects an output growth of 15 percent in 2005, Xiao said.

As for the China Petroleum and Chemical Corporation (Sinopec), China's biggest oil refinery and one of the major oil producers of the country, retaining a daily crude oil output of 780,000 barrels per day, it witnessed a year-on-year growth of natural gas output of 5.3 percent. The price of crude oil produced by Sinopec rose by 26.73 percent year-on-year to nearly US$35 per barrel in the first quarter.

Upon the background that the international oil price remaining at a high level of about US$50  per barrel, it is reasonable for China's oil producers to expand their output capacity as the profits margin has been greatly enlarged, said Shan Weiguo.

On the other hand, based on the policy of meeting domestic demand for energy resources mainly by increasing domestic output capacity, the Chinese government has issued and will issue more preferential policies to encourage China's oil producers to tap further the potential of China's oil output capacity, said Shan.

Data show that China invests billions of US dollars in the exploration and development sector of the country's oil industry every year.

In the first quarter, Sinopec spent 4.451 billion yuan (some US$538 million) in building a new oil output capacity of 600,000 tons per year and a new natural gas output capacity of 90 million cubic meters per year.

The investment of CNOOC in the sector of exploration and development in the first quarter is 3.3368 billion yuan (some US$403 million), a rise of 53.88 percent over the same period of last year.

(Xinhua News Agency May 21, 2005)