China to Launch First Deepwater Oil Rig

China's dependence on oil imports always has 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.

China this week will launch its first homegrown deepwater drilling rig, located in the South China Sea some 200 miles southeast of Hong Kong, state media reported Tuesday.

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 conflicts with its neighbors.

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

It will be the first independent deepwater 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 deepwater drilling.

In April, 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 is estimated to have 23 billion to 30 billion tons of oil and 16 trillion cubic meters of natural gas, which would account for up to one-third of China's total oil and gas resources, Xinhua reported.

China's dependence on oil imports always has 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.

Copyright Agence France-Presse, 2012

TAGS: The Economy
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