China’s CNOOC to launch first deep-water oil rig

BEIJING – China will launch this week its first home-grown deep-water drilling rig located in the South China Sea, some 300 kilometers southeast of Hong Kong, state media reported Tuesday, May 8.

China, dependent on oil imports to fuel its surging economy, claims full sovereignty on the sea, which has huge oil and gas reserves, often leading to diplomatic rows with its neighbors.

The rig launched by China National Offshore Oil Corp. (CNOOC) will begin operations on Wednesday, May 9, at a depth of 1,500 meters, said the Beijing News, quoting a company statement.

It will be the first independent deep-water oil drilling rig operated by a Chinese company, marking “a substantial step” made by the country’s oil industry, CNOOC said.

Previously China’s offshore oil production and exploration had been limited to a depth of 300 meters, according to media reports, although CNOOC has cooperated with foreign companies on deep-water drilling.

In April this year CNOOC and Eni, the Italian oil and gas group, signed a production-sharing contract for exploration of another block in the South China Sea owned by the Chinese company.

The South China Sea (also called West Philippine Sea) is estimated to have 23 billion to 30 billion tons (25.3 to 33 billion short tons) of oil and 16 trillion cubic meters (560 trillion cubic feet) of natural gas, which would account for up to 1/3 of China’s total oil and gas resources, Xinhua reported.

Also on Tuesday, Filipino businessman Manuel V. Pangilinan told Philippine media that he had met with CNOOC executives who invited him Beijing last week to talk about possible partnerships over Recto Bank, where a large deposit of natural gas near the Phiippines was recently discovered.

China, as well as Taiwan, have protested the exploration activities of the Pangilinan-led firm at Recto Bank, which is near the Philippine province of Palawan, sparking a recent round of diplomatic and geopolitical tension between Philippines and China.  

China’s dependance on oil imports has always been a source of concern for the government which has actively been pushing its oil and gas companies to explore existing reserves and branch out overseas.

In 2011, China imported 57% of the oil it consumed. – Rappler, with Agence France-Presse