Oil field expected to pump $1.07b annual revenue in overseas sector

Shengli Oilfield workers process crude oil at a plant in Dongying, Shandong province. Shengli has started exploration in 38 blocks in the western region's basins. [Photo / China Daily]

BEIJING - China Petroleum and Chemical Corp's Shengli Oilfield plans to realize up to 7 billion yuan ($1.07 billion) in annual revenue in its overseas petroleum-engineering sector during the 12th Five-Year Plan period (2011-2015), making it one of Shengli's major growth engines, a top official from the oil field said on Thursday.

"We're a profit-driven company, and the petroleum-engineering sector has higher profit margins abroad than in the domestic market We have mapped out our overseas strategy by focusing on the Middle East, Central Asia, South America and Central Africa in the five years," Wang Lixin, head of the Shengli Petroleum Administration Bureau told China Daily during the National People's Congress meeting last week.

"We hope our contract volumes in the Middle East, Central Asia, and South America will each reach $200 million a year before the end of 2015," Wang said.

The bureau, which manages China's second-largest oil field, hopes the overseas market will make up 20 percent of its 35 billion yuan annual income target in the petroleum-engineering sector in the five years, compared with about 10 percent in 2010.

Shandong-based Shengli, the biggest oil field for China Petroleum and Chemical Corp, or Sinopec, started exploration in 1964 and has maintained its annual oil production at more than 27 million tons for the past 15 years, reaching 27.34 million tons last year, Wang said. He added that the yearly output would remain at that level during the five-year plan period, reaching 133.3 million tons of crude oil production by the end of 2015.

The new proven oil reserves are expected to total 570 million to 600 million tons in that period, during which time another 14.89 million tons of oil production capacity will be added.

Meanwhile, the new natural gas reserves are planned to reach 5 billion cubic meters (cu m) in that period, while another 240 million cu m gas production capacity will be added.

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In addition, as oil production in its traditional eastern region blocks bordering Bohai Sea may be decreased, Sinopec's Shengli has started exploration in 38 blocks in the western region's basins, which include Junggar Basin and Tuha Basin in Xinjiang Uygur autonomous region and Qaidam Basin in Qinghai province.

"We're still in the investigation and exploration phase of the western blocks, and the Chunfeng Oilfield in Junaggar may reach production capacity of 160,000 tons this year," said Wang Xinhong, vice-chief engineer of the oilfield.

The bureau expects its annual oil output in the western region will surpass 500,000 tons a year before the end of 2015, while the new proven oil reserve will be as high as 100 million tons.

Shengli Oilfield, which covers an area of 202,000 square kilometers with 54 blocks that cover the newly added western blocks, plans to invest more than 150 billion yuan in the upstream-related business in the five years, with an aim of cumulatively realizing more than 750 billion yuan revenue from 2011 to 2015.

"As oil prices keep rising, we hope to have a higher profit this year," Wang Lixin said.