Reuters | November 2, 2000
By Chen Aizhu,

SINGAPORE -- China's largest oil and gas producer PetroChina
(NYSE:PTR - news) plans to offer at least 11 onshore concession blocks next
year, Beijing-based industry sources said on Thursday.

The concessions included three oil exploration blocks in northwest
Xinjiang's Tarim Basin and eight oil and gas exploration and development
blocks in northwest Ordos Basin, they said.

The company was also considering blocks in Xinjiang's Junggar Basin,
PetroChina's top oil and gas producing area in western China, sources said.

PetroChina is studying the blocks, which are subject for state approval.

The new offers would be part of PetroChina's latest drive to open up the
land-based upstream sector to foreign investors.

``We will be stepping up onshore concession offers next year,' a senior
PetroChina official told Reuters earlier this week.

``We are considering more liberal policies such as exemption to income tax
for the initial two years and a lower tax rate for the next three years
after the fields are in operation.'

A dismal success rate for foreign companies in the hunt for onshore
resources and a historic tendency to keep the most prospective areas for
itself has dampened foreign interest since China opened its onshore sector
in 1985.

PetroChina has proven reserves of 855.2 million barrels of oil equivalent in
Junggar, 375 million barrels in Ordos and 276.3 million barrels in Tarim as
of September 30, 1999, a company official told Reuters.

In September, the company put on sale 15 oil and gas blocks in northeast
China's Bohai Bay Basin.

Analysts said gas blocks in Ordos Basin in the Inner Mongolia and Shaanxi
provinces might garner special attention as China plans to build a 4,167 km
gas trunkline through the area in the next three to five years.

The Chinese government plans to ship gas from the remote and poor west to
the affluent east to jump start economies in the hinterland, which are
lagging.

Royal Dutch/Shell (quote from Yahoo! UK & Ireland: SHEL.L) has entered a $3
billion project with PetroChina to jointly develop and market natural gas
from the Changbei field in the Ordos Basin.

The Ordos and Tarim basins were some of the biggest producing areas in
western China in 1999, each churning out 6.42 million tonnes and 4.18
million tonnes of crude respectively, Chinese official media reported.

The Junggar and Ordos basins registered gas of 1.5 billion and 1.207 billion
cubic meters each in 1999.