(EnergyAsia, May 24 2012, Thursday) — PetroChina and Sinopec, two of the country’s three main state hydrocarbon companies, have been boosting their natural gas reserves but not oil, according to a recent analysis of company data by US energy media Platts.
PetroChina grew its natural gas reserves by an average 3% a year to 66.65 trillion cubic feet (tcf) or 11.88 billion barrels of oil equivalent (boe) between 2007 and last year while Sinopec raised its gas reserves by 4.53% to 6.74 tcf or 1.2 billion boe last year, said Platts.
Over the same period, PetroChina’s proved crude oil reserves edged down from 11.7 billion barrels to 11.13 barrels, while Sinopec’s have fallen from 3.02 billion barrels to 2.87 billion barrels.
The two companies, which monopolise the country’s onshore upstream sector, have reported little growth despte their large outlay in domestic oil and gas exploration and production activities.
According to Platts, PetroChina has been raising its upstream capital expenditure by an average 4.2% a year to reach 179.2 billion yuan over the last five years, while Sinopec’s upstream budget has edged up 1.3% a year to 55 billion yuan. Less than 10% of those expenditures have been on overseas projects.
On the other hand, China National Offshore Oil Corporation (CNOOC), which focuses on growing its reserves through overseas acquisitions, boosted its oil and gas reserves from 2.6 billion boe in 2007 to 3.6 billion boe last year, according to Bernstein Research. Overseas projects helped raise CNOOC’s reserves by 30% over that period.
Of growing concern to Chinese state planners is that three companies are not replenishing their oil reserves fast enough to replace production and meet the country’s fast-rising domestic oil consumption.
China’s major domestic oil fields are in rapid decline, and have yet to be fully replaced by new finds.
All three state companies have stepped up their programmes to increase their reserves by targeting acquisitions abroad.
In March, Chinese agencies made important acquisitions in a subsidiary of Portugal’s Galp Energia SGPS SA, and French oil major Total.
Sinopec Group, whose total oil production fell 1.9% to 881,452 b/d in 2011, said a fully-owned subsidiary completed the acquisition of a 30% stake in the Brazilian unit of Portugal’s Galp Energia SGPS SA for US$5.16 billion.
Sinopec International Exploration and Production Corp expects to book new oil production of 21,300 boe/d in 2015 and 112,5000 boe/d in 2024 from its Galp stake.
In a little publicised but more significant transaction, the Chinese government acquired a 2% stake in French major Total as it deepens ties ties with Sinopec through joint investments in shale gas production and refinery investments. The parties involved have revealed little about which Chinese agency acquired the stake, for how much and when.
The Chinese government is also betting heavily on Venezuela’s heavy oil assets through complex deals with the country’s state energy company PDVSA and the government of President Hugo Chavez.
PDVSA now exports between 300, 000 and 400,000 b/d of crude to China and has promised to raise that to one million b/d by 2016, partly to pay off as much as US$30 billion in lon-term friendly loans extended by Beijing.
China is eyeing a starring role in developing Venezuela’s famed Orinoco oilsands reserves which hold more than 500 billion of extra heavy crude oil, but the Chavez government is stalling for better terms from its new ally even as it relations with long-time US customer is deteriorating.