updated 3/28/2007 12:14:49 PM ET 2007-03-28T16:14:49

For 15 years, China's oil companies have scoured its territory for new oil sources, drilling in Central Asian deserts and the floor of the Pacific, hoping to reduce rising dependence on imports.

After years of disappointment, one company reportedly has made a major discovery.

PetroChina Ltd. has found an offshore field that could become China's biggest new domestic petroleum source in a decade, with reserves of 2.2 billion barrels, the official Xinhua News Agency said Wednesday.

The scale of the find, if confirmed, would be welcome news to the communist government. China became a net oil importer in the late 1990s and now is the world's No. 2 consumer after the United States, and consumption last year rose another 9.3 percent to 2.4 billion barrels.

Such a field would be a "world-scale discovery," said Gavin Thompson, an oil consultant in Beijing for the Scottish firm Wood Mackenzie.

"In terms of energy security, a 2 billion barrel discovery is going to be very welcome, not only to PetroChina but to China's energy planners," he said.

PetroChina disclosed last week that it found a new field in Bohai Bay but released no details. Company spokespeople refused on Wednesday to give more information.

Thompson said PetroChina is likely to have to do more drilling to confirm how much oil it can extract.

China's leaders see reliance on imported energy, a large share of it from the politically volatile Middle East, as a strategic weakness.

They are trying to improve the poor efficiency of China's fuel-guzzling economy, which consumes several times as much energy per unit of output as Japan or the United States, while pushing state oil companies to find new domestic sources.

Imports in 2006 surged by 16.9 percent and accounted for 47 percent of consumption, while domestic production edged up just 1.7 percent.

Chinese drillers have found several big gas fields, but no major oil sources since the mid-1990s, when blocks were found in Bohai Bay and in the Tarim Basin of the northwest's searing Taklamakan Desert.

Chinese oil companies have spent billions of dollars to secure oil and gas supplies abroad, making deals in areas as farflung as Venezuela and Kazakhstan. Their willingness to deal with pariahs such as Iran and Sudan has caused friction with Washington.

Beijing is feuding with Tokyo over control of possible gas resources in disputed waters between the two nations.

China and Russia are building pipelines to deliver Siberian gas to Chinese markets. Beijing is lobbying Moscow to link China to a pipeline that will carry Russian crude to the Pacific.

Economists say Chinese oil demand, driven by blistering economic growth that reached 10.7 percent in 2006, has strained world supplies and pushed up prices.

Surging consumption in China has brought a windfall for the country's oil companies.

PetroChina, whose shares are traded in New York, said profits last year rose to a record 142.22 billion yuan ($18.4 billion), increased by strong demand in its home Chinese market. The Beijing-based company has become Asia's biggest by market capitalization.

At home, foreign consultants have taught Chinese oilmen how to find more and to extract more from existing fields, said Jim Brock, an industry consultant in Beijing.

"They're adopting a lot of new methods, revisiting a lot of old fields using methods that were not available 10 or 15 years ago," Brock said. "Their technology is slowly improving, across the board. They've got the money and the resources."

China has some 16 billion barrels of proven reserves, according to British oil company BP PLC.

But much of it is of mediocre quality and in rock formations that are difficult and expensive to tap, Brock said.

"It's economically competitive, but the costs are high," he said.

Despite the reported size of the Bohai field, it was unclear how it would affect China's need for imports.

Daily production could reach 200,000 barrels within three years, according to Xinhua. But that still would be equal to just a fraction of China's 2006 imports of 2.9 million barrels per day.

The discovery "helps lessen the pressure (for higher imports), but still it's going to be significant pressure," Brock said. "They're going to continue to be a major player in the international market."

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.


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