With its modernization efforts stymied by energy shortages, China has unexpectedly speeded up plans to solicit bids from foreign oil companies to begin exploratory drilling in offshore waters that are believed to contain rich hydrocarbon resources.
Reports in the official press today said that Peking will start no later than early next year to invite bids for drilling rights along China's east coast where, according to the New China News Agency, several dozen potentially "huge" oil fields have been identified in seismic surveys.
The announcement came as a surprise to oil industry executives in Peking. Chinese Petroleum Ministry officials had indicated as late as July that difficulties in formulating tax and contract policies could delay bidding until late next year.
China apparently moved up bidding plans to stimulate energy production at a time when the nation's modernization program is plagued by stagnating oil and coal output. The serious energy deficit has forced thousands of factories to operate below capacity.
Discoveries of offshore oil have long figured into China's economic development program. Planners are counting heavily on offshore production both to fuel Chinese industries and to earn foreign exchange through exports to Japan and the West.
Forty-eight foreign oil companies, most of them from the United States, have completed extensive geological testing in the South China Sea, South Yellow Sea and two regions off China's southeastern shore--Beibu Gulf and Yinggehai Basin.
Survey results were turned over to Chinese analysts months ago. Since then, oil companies, which conducted the costly tests at their own expense, have waited for invitations to submit bids. Earlier unofficial plans to open bidding were postponed three times this year.
While estimates vary widely, the most conservative forecasters--including the U.S. Central Intelligence Agency--believe China possesses about 40 billion barrels of oil below the surface of its offshore waters.
Foreign experts, however, say it is still too early to judge accurately how plentiful the reserves are. Even if the oil exists in large quantity, the experts say, it may be too deeply imbedded or may contain too much sulfur to make production commercially feasible.
Oil companies planning to participate in the competitive bidding will be seeking rights to drill wells below the ocean floor to determine if development is practical. The next stage would be actual production of oil in quantity, a process that takes at least four years to achieve.
China's Ministry of Geology says it has discovered six offshore oil and gas basins, or sedimentary formations containing pools of black gold, according to today's report by the official news agency.
Atlantic-Richfield Co. signed a contract in June for exploration and development of a block within Yinggehai Basin. Arco's contract, which allows for a sharing of output, is the only one negotiated by an American company. An Arco official said today that exploratory drilling will begin early next year.
A Japanese venture that contracted for rights to drill in the northeastern offshore region of Bohai Bay struck oil in its first tests last May. Workers opened a major well producing at least 10,000 barrels of oil a day, more than enough to make it commercially feasible.