The country's top oil refiner, China Petroleum & Chemical, also known as Sinopec, will begin pumping at least 4 billion cubic meters of gas a year from its new field in Southwest China's Sichuan Province starting in 2008.

 

The move is expected increase the Beijing-based company's gas output by as much as 55 percent, industry analysts said yesterday.

 

The new gas well, called Puguang field, is located in the eastern part of Sichuan, adjacent to Chongqing Municipality.

 

Sinopec plans to double the annual gas production from the year 2010, the company said in a statement.

 

Wang Jiming, vice-chairman of Sinopec, last week in Beijing told reporters that the gas exploration project was expected to cost the company about 40 billion yuan (US$4.9 billion), which also included a gas pipeline to transport the cleaner fuel from resource-rich Sichuan to Jinan, capital city of the energy-hungry Shandong Province in East China.

 

"We will produce gas within the next five years from the new well," Wang told China Daily.

 

Verified by the Ministry of Land and Resources, recoverable gas reserves reached 251 billion cubic meters by the end of last year, Sinopec said.

 

"The government has agreed on the company to conduct preliminary work to develop the new reserves in Sichuan," the company said in a statement.

 

Wang last week said China's gas demand would reach 100 to 120 billion cubic meters by the year 2010.

 

Domestic production of natural gas last year was 50 billion cubic meters in China, which is expected to maintain an annual increase of at least 10 percent over the next five years, Wang added.

 

Based on the figures Wang detailed, China's own gas production will be short of demand by about 40 billion cubic meters, which will be met by imports through cross-border pipelines or LNG (liquefied natural gas) terminals along the eastern coast.

 

Foreign media sources recently reported that China was expected to finalize an agreement to import gas from Russia by detailing the price formula by the end of this year, and was in talks with Turkmenistan to build pipelines to import 30 billion tons of gas annually from the Middle Asian country by 2009.

 

Chinese companies involved such as China National Petroleum Corp (CNPC), the parent company of Sinopec's domestic rival PetroChina, yesterday declined to comment.

 

Liu Hequn, vice-president of CNPC's planning institute, said the rising gas prices may delay the country's ambitious plan to import gas to meet surging domestic demand.

 

The government recently announced that from the end of March a windfall tax would be imposed on the country's oil majors if global crude prices remain above US$40 a barrel.

 

Liu Gu, a senior analyst with Shenzhen-based Guotai Jun'an Securities, yesterday said the new tax would collect about 19.1 billion yuan (US$2.4 billion) in total from the country's top three oil companies, Sinopec, PetroChina and China National Offshore Oil Corp this year. The calculated was based on a projected crude oil price of about US$50 a barrel, she said.

 

Sinopec's net profit rose 23 percent to 39.6 billion yuan (US$5 billion) last year.

 

(China Daily April 7, 2006)