China Daily | 04/01/99

URUMQI (Xinhua) _ China expects to develop the Tarim Basin in northwestern
Xinjiang Uygur Autonomous Region into a major oil and gas production base by
early next century.

"Large-scale development of oil and gas fields is proceeding smoothly,"
according to Liao Yongyuan, director of the Tarim Oil Exploration and
Development Headquarters.

Geologists have discovered 13 fields in the basin with combined deposits of
300 million tons of oil and 220 billion cubic metres of natural gas.

Plans for 1999 call for verifying an additional 40 million tons of oil and
300 billion cubic metres of natural gas in the basin, which covers an area
slightly larger than France. Verified oil reserves are expected to reach an
accumulated 1 billion tons by the end of next year, with verified natural
gas deposits of 500 billion cubic metres, said Liao.

The Tarim Basin, an area known as a "Sea of Hope," offers potential oil
reserves of more than 10.7 billion tons and natural gas reserves in excess
of 8.4 trillion cubic metres, accounting for about 13 per cent and 25 per
cent of the current national total, according to an official resource
assessment report.

"We will face challenges from domestic and international oil markets.
Consequently, we will stress economic results and the commercial value of
oil deposits in both exploration and exploitation," said Liao, adding that
"developing the Tarim oil base will help China reduce its reliance on oil
imports and increase exports in the future."

The China Oil and Natural Gas Corporation initiated its oil exploration
effort in the Tarim Basin in April 1989.

A modern oil exploration system has been created in the basin in spite of
difficulties resulting from sandstorms which hit the area every four days on
average and the fact that oil reservoirs are usually found at depths of
5,000 metres.

Facilities that have been built to support the Tarim effort include oil
pipelines stretching more than 1,000 kilometres, an advanced
telecommunications network and a 522-kilometre north-south desert highway.

The introduction of large oil platforms and the use of advanced drilling
technologies have reduced operating costs in the basin. The current drilling
rate has doubled the level of the early 1990s to stand at 1.6 metres per
hour, according to the headquarters.

"Related highly efficient efforts have created sound conditions for further
development of the oil fields," said Liao.

According to Liao, the Tazhong No 4 Oilfield, the world's second largest, in
the Taklamakan Desert, was discovered in 1992.

The field's current oil output accounts for 22 per cent of the basin's
total.

Since 1997, three oil and gas zones with combined natural gas deposits of
420 billion cubic metres have been found in the basin, making the Tarim
Basin one of the nation's three largest gas producing areas.