CHINA SLASHES 1993 TARGET AS OIL PRODUCTION SLIDES

CHINA SLASHES 1993 TARGET AS OIL PRODUCTION SLIDES

China appears to be moving the goalposts to put an acceptable face on its generally dwindling oil production.

The country's 21 onshore fields produced 104 million metric tons (728 million barrels) of crude in the first nine months of this year, China National Petroleum Corp. said Wednesday. It said that equated to about 76 percent of the annual goal set by the state.The firm said it expects to produce 137.5 million tons in the full year. That would compare with 137.8 million tons for 1992, which was up from 130.8 million in 1991.

As recently as August, Wan Tao, the company's general manager, was forecasting 140 million tons this year. No explanation was given of the reduced target, but it is known the mainstay onshore fields are fading.

Offshore fields in the first nine months produced 3.3 million tons, China National Offshore Oil Corp. said. That compares with 3.8 million tons for all of 1992.

An official from that firm said earlier this week that he expects output this year will exceed 4.5 million tons.

Offshore production last year was 3.8 million tons.

Daqing, China's largest oil field, pumped 41.8 million tons of oil in the first nine months, the onshore agency said.

The field, in northeastern Heilongjiang, has been producing around 50 million tons a year for 17 years but is now engaged in enhanced recovery work to keep going.

The agency said Daqing is expected to produce 55 million tons annually until 1996 then dip to 50 million through the end of the decade.

Nine-month production from remote northwestern Xinjiang, which officials hope will be the next bonanza, increased substantially, the agency's figures show.

The Turpan-Hami Basin produced 810,000 tons, more than double that of the year-earlier period. The Tarim Basin recorded output of 1.13 million tons, up 77 percent on a year earlier.

Qiu Zhongjian, president of the Tarim project, said previously that 1.65 million tons will be produced from Tarim this year. As more fields are developed, annual production will rise to 5 million tons within three years, he said.

Tarim, covering some 216,000 square miles, is largely inhospitable desert. Just under 30,000 square miles has been earmarked for foreign exploration, and a number of Western and Japanese companies have entered bids.

Six fields have been identified since 1989, and three are pumping, with total output so far of 2.66 million tons, official figures show.

At an industry conference in Singapore last month, a senior Chinese oil official said foreign companies will be offered "more attractive" terms to work in the basin, "considering the harsh environment."

Zeng Xing Qiu, vice president of China National Oil & Gas Exploration & Development Corp., said China would "significantly raise" the rate of production over which foreign companies must pay royalties on output. He didn't give any figure for the new threshold.

Foreign companies working onshore fields now pay royalties after production hits 50,000 tons a year. For offshore fields, the trigger point is 1 million tons.

Mr. Zeng also committed China to purchase for hard currency "any amount of Tarim oil offered by foreign companies." That decision hasn't been publicly ratified by the government, but Mr. Zeng said he had authority to make it.

China is expected to become a net oil importer in the next few years, though officials say some exports will continue as a way of bringing in hard currency. Chinese oil exports last year were 20.7 million tons and are forecast to slip to 19 million this year.