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Oilfield City Daqing Set to Broaden Its Interests
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Daqing of Heilongjiang Province, where China's top oilfield is located, will be transformed from a resource-dependent industrial city to a broad-based industrial powerhouse, according to the nation's top economic planner.


"The Daqing city government has made it crystal clear that the top priority for Daqing's industrial transformation is to further develop its downstream follow-up industries. And the first choice naturally lies in the oil and petrochemical industrial segment," the National Development and Reform Commission (NDRC), China's top economic regulator, said on its website yesterday.


By the end of the country's 11th Five-Year Plan (2006-10), Daqing aims to build its petrochemical industry to 120 - 130 billion yuan of industrial output. And the city is set to have 1.2 million tons of ethylene capacity, 450,000 tons of propylene output and 1 million tons of fertilizer-making capability, according to the NDRC.


Sources from the China National Petroleum Corporation (CNPC), the nation's top oil company, said Daqing was constructing a world-class propylene and petrochemical production base. The CNPC's listed arm PetroChina operates the Daqing oilfield and the petrochemical industry there.


"All-round development of the Daqing oilfield, including the development of the downstream petrochemical segment and other primary, second and tertiary industries there, is the key for maintaining sustainable growth," the CNPC quoted Premier Wen Jiabao as saying on its website.


The second category of Daqing's follow-up industry should be agricultural product processing, with the city's output value of the corn, soybean and potato processing industries hitting 50 billion yuan by 2010. The third and fourth follow-up industries for Daqing are mechanics and electronics manufacturing, according to the NDRC.


"The CNPC has set up a mechanics and equipment manufacturing base in Daqing with output value of 10 billion yuan The annual sale of the fourth follow-up industry, electronics manufacturing, plus rubber and leather processing, is expected to reach another 10 billion yuan," the NDRC said.


Daqing is China's largest oilfield, with current annual production of about 45 million tons oil equivalent. The CNPC's long-term target is to level off Daqing's production at 42 million tons oil equivalent by 2010, when natural gas is expected to contribute 9.5 percent of the total output.


"Given that oil production at Daqing oilfield is decreasing gradually, it is necessary to further develop follow-up industries at Daqing to maintain sustainable development," said Han Xuegong, a senior analyst with the CNPC.


Han said it was an ideal option to develop oil-dependent downstream industries in Daqing. Some of the oil-dependent follow-up industries, such as petrochemical manufacturing, will benefit from the immediate availability of oil and gas resources from Daqing.


The development of other industrial segments in Daqing, such as mechanical equipment manufacturing, will spur Daqing's oil and gas production industry, Han said.


"Therefore it is a win-win situation for both oil production and follow-up industry development," Han added.


(China Daily April 6, 2007)


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