Official with PetroChina's Tarim unit refutes media reports of major gas find

Business Materials 13 October 2007 08:29 (UTC +04:00)

( INTERFAX ) - An official with PetroChina's Tarim Oilfield company refuted recent media reports that the company has discovered a major gas field in the northwestern Xinjiang Autonomous Region with potential reserves of as much as 130 billion cubic meters, adding that the unit has only drilled one well and exploration activities are still in the preliminary stage.

Chen Shibing, an official with the unit's public affairs department, also told Interfax that the unit is currently performing a three-dimensional analysis on the well, but declined to reveal the daily volume of gas flowing from it since preliminary data cannot be considered conclusive.

State-run China Daily reported today that PetroChina had discovered the Dabei III gas field in Xinjiang with an estimated daily output capacity of 286,000 cubic meters. The report said that the discovery could be the third-largest gas field in Xinjiang after the Kela II and Dina II gas fields, which hold proven reserves of 250 billion cubic meters and 170 billion cubic meters respectively.

The report also said that the new gas field would help to guarantee sufficient supplies for the country's existing West-East gas pipeline, as well as the upcoming Second West-East gas pipeline.

Due to investor Warren Buffett's plan to sell much of his stake in Petrochina, the industry is especially sensitive to any news relating to Petrochina at the moment. Buffett's investment vehicle, Berkshire Hathaway, owns 3.1 percent of all listed shares in PetroChina, and is its second-largest shareholder after the parent company China National Petroleum Corporation (CNPC).

The media reports about the field caused PetroChina's Hong Kong share price to rise by 2.24 percent yesterday and jump by a further 4.12 percent in today's morning session, offsetting the impact of Buffett's efforts to sell the oil giant's stock.

Gas reserves have become more and more valuable for China's energy giants after the government announced last year that it aims to have gas, a cleaner fuel than oil, account for 5 percent of the country's total energy mix, up from the current 3 percent. Long distance gas lines linking resource-rich western regions as well as city gas distribution pipelines are now being built to meet the expected soar in demand.

PetroChina is planning to build the Second West-East pipeline, the world's largest gas pipeline, to carry fuel from Turkmenistan to the financial center of Shanghai and the southern manufacturing hub of Guangzhou. The pipeline will be up to 8,000 kilometers long in total, and have an annual transmission capacity of 30 billion cubic meters.