China looks to the sea for new oil
China isn't waiting for onshore oil supplies to run dry before it expands its offshore frontier.
Earlier this month, Qin Wencai, head of the newly formed China National Offshore Oil Company, said exploitation of the reserves must be speeded up. China's onshore supplies are expected to steadily decline after the mid-1980s.
This was shortly after China invited 46 Western oil companies to submit bids for exploration of the Pearl River Basin off Hong Kong and Canton. The deadline for this round of bidding was March 30.
The foreign companies were given maps and regulations to assist their offshore bids. No details of financial arrangements have been disclosed so far, although Chinese officials did say the oil companies will have to bear exploration costs.
Oil companies are waiting for a model Chinese contract. Clues may lie in a 1980 agreement with Japan, which is allowed to keep 42.5 percent of the oil it finds in the Bohai Gulf off northern China.
Elf-Aquitaine of France has also begun drilling in China's offshore waters. Both the French and the Japanese have had encouraging, but not dramatic, finds.
Even with the accelerated exploration plans, no offshore oil is expected to be recovered until 1986, according to Mr. Qin.
China's current daily production of 2 million barrels is slightly less than the volume of the North Sea operations. This figure could rise to 5 million barrels daily by the year 2000, say Exxon Corporation officials, who helped in preliminary surveys of China's offshore waters.
Estimates of possible reserves vary. But one expert, John Emerson of the Chase Manhattan Bank, says they might equal those of Saudi Arabia.
Michael Sandberg, chairman of the Hong Kong and Shanghai Bank, estimates that exploration and production of Chinese offshore oil will cost $20 billion between now and 1990. Financing is likely to be arranged from oil company funds, the international banking community, and Chinese authorities.