China National Petroleum Corp. plans to spend 5 billion yuan in the fourth quarter to boost its crude oil production capacity in response to higher oil prices.
CNPC intends to add a combined 600,000 tonnes/year (12,000 b/d) of crude production capacity in six oil producing complexes: Liaohe and Jilin, in northeastern China; Dagang and Huabei, in northern China; and Tuha and Changqing, in northwestern China. The six complexes have combined production of 35 million tonnes/year (700,000 b/d).
Increasing crude production has proven difficult for CNPC, whose major producing fields are in decline. The state firm also has had to cope with reduced budgets for exploration and development in recent years and a marked cooling of interest from foreign petroleum companies willing to invest in China's upstream sector.
CNPC's decision to ramp up production follows a strong rebound in earnings in the first 8 months of 1999, the result of resurgent oil prices. The price of China's main benchmark crude, Daqing, was up 75% in September from January's price, to 1,411 yuan/ tonne. The firm's earnings for the period totaled 7.153 billion yuan, up 6.783 billion yuan from the same time a year ago.
CNPC is China's largest crude producer, with production of about 110 million tonnes/year (2.2 million b/d)-about 68% of the national total.
