PetroChina offers foreign companies Xinjiang oil, gas blocks

by on September 28, 2012 2:26 pm BST

PetroChina offers foreign companies Xinjiang oil, gas blocks


BEIJING — PetroChina has offered oil-and-gas blocks in northwestern Xinjiang Uighur autonomous region to foreign companies for joint development, according to two people familiar with the matter.

No foreign company has been offered a chance to participate in upstream oil-and-gas development in Xinjiang since 2006. The remote, resource-rich region is typically controlled by state-owned PetroChina and Sinopec. One of the people said PetroChina had offered 10 blocks to potential partners on an invitation-only basis.

The blocks are located in remote areas and range from 6,000 to 15,000 sq in size, the person said. They are expected to contain conventional oil and gas, but seismic data on them is limited, the person said.

PetroChina spokesman Mao Zefeng said he had no knowledge of PetroChina offering blocks in Xinjiang to potential foreign partners, but said it was common for the company to cooperate with foreign companies.

The blocks may attract little interest due to the region’s complicated geology and high exploration costs, said Tian Miao, an energy-policy analyst at North Square Blue Oak.

Simon Powell, head Asia oil-and-gas analyst at brokerage CLSA, said PetroChina has few onshore production-sharing contracts with foreign partners and none in Xinjiang.

“With the exception of coal-bed methane and shale [natural gas], PetroChina pretty much does everything by themselves,” he said. “Where they do enter into production-sharing contracts is offshore China or in some older oil fields with higher lifting costs.”

In 2006, PetroChina opened up 12 blocks in the Tarim basin, in northwestern Xinjiang, to foreign companies. Companies such as French oil major Total S.A. (TOT) expressed interest in the blocks but ultimately none submitted bids.

Existing energy projects in Xinjiang produce mostly natural gas but the region holds some of China’s largest reserves of hard-to-extract heavy crude oil, analysts say.

Both PetroChina and Sinopec have pledged to boost investment and step up exploration in Xinjiang as part of efforts to increase domestic oil-and-gas production.

Dow Jones Newswires