Workers at Shengli Oilfield, Shandong province. The oilfield, the country's second-biggest by production, has produced 1 billion tons of oil since it was first discovered half a century ago. [Photo / China Daily]

In 2010 it made up 10% of earnings; now it looks for 20% in five years

DONGYING, Shandong - China Petroleum and Chemical Corp's Shengli Oilfield is expected to generate 20 percent of the company's total output value from the overseas market by the end of 2015, when production growth in its aging field in eastern Shandong province dries up.

The field realized 2.35 billion yuan ($363 million) in output value in 2010 from abroad, making up about 10 percent of its total, while profits from overseas stood at 256 million yuan ($40 million) in the same period, said Yang Changjiang, deputy Party secretary of the Shengli Petroleum Administration Bureau, which manages Shengli, Sinopec's biggest oilfield.

The field's output value rose almost 1.7 times from 2006 to 2010. Its new contract value outside China totaled $1.87 billion in the same period, according to the bureau.

"The overseas market has become one of our major driving forces for growth. We hope to double the value during the 12th Five-Year Plan period (2011-2015)," Yang said.

He added that the field will continue to focus on the petroleum-engineering sector in the overseas market, stressing that the Middle East, Central Asia, North Africa, Latin America and Southeast Asia will become target regions.

The field started its maiden overseas investment in Russia and Kyrgyzstan in 1992 and won the bid for exploration contracts in the Kashan block in Iran in 2001.

Shengli, the country's second-biggest oilfield by production, has produced 1 billion tons of oil - with cumulative proven geological oil reserves of 5.07 billion tons as of May - since it was first discovered half a century ago.

The field's proven geological oil reserves accounted for 20 percent of the country's total onshore reserves.

"Shengli has set a target to produce 27.3 million tons of crude oil in 2011 after reaching an average annual oil output of more than 27 million tons for 16 straight years," Yang said. It reached its yearly output peak in 1991 with 33.55 million tons.

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On the other hand, Shengli field has also actively tapped into other areas to lift production in recent years when the traditional blocks in eastern Shandong province can no longer maintain high production after 50 years of exploration.

In 2010, the field showed signs of slowing output of 27.34 million tons, down 2 percent from a year earlier. More than 231 million tons of technically recoverable reserves of the field still remain if the recovery ratio maintains the current level of 28.3 percent, according to the bureau.

"We have also spared no efforts to explore resources in the shallow sea (within a depth of 15 meters) in the Bohai Bay area to keep our field's output at a stable level," said Wang Zenglin, the field's chief expert in oil production engineering.

Figures from the bureau showed that its offshore crude oil output amounts to 2.89 million metric tons a year currently, increasing its offshore oil production to 34.73 million tons since its first offshore oilfield - Chengdao Oilfield - was put into operation in 1993.

Shengli aims to add an additional 1 million tons of oil output a year from the shallow sea area in five years, Wang said.