Transport woes cut Tarim output

PUBLISHED : Thursday, 14 May, 1998, 12:00am
UPDATED : Thursday, 14 May, 1998, 12:00am

Transport constraints will limit crude oil output from the Tarim Basin this year to 4.2 million tonnes, unchanged from last year, and about five million by 2000, a top official said.

The Tarim, in the Taklamakan Desert in Xinjiang, is one of the mainland's three large oil basins with estimated reserves of 10 billion tonnes and eight trillion cubic metres of natural gas.

Jia Chengzao, vice-president of the China National Petroleum Corporation (CNPC), says the slow increase in output is mainly due to transport constraints, because oil has to be carried in a pipeline 580 kilometres across the desert where it is taken by train to a processing centre in Gansu.

In recent years the main discoveries have been natural gas.

'The recent fall in the world oil price is bad for us. It has affected other oilfields in China and closed some of the old and unprofitable ones,' Mr Chengzao said. 'But it has not made us limit our output. Demand in China will continue to be strong.' He said lower world oil prices had not caused a drop in interest among foreign oil companies in the Tarim, with the Japan National Oil Corporation signing an exploration contract last year. Exxon is exploring three blocks and a consortium of Texaco and the Italian state oil firm AGIP four.

Mr Chengzao said the production cost of Tarim oil was a commercial secret but that it was cheaper than imported oil.

The exploration costs are similar to other areas in China, with the size of the discoveries and the good quality of the oil offsetting the logistical costs.