China and Russia have signed their first agreement to jointly explore and develop oil resources in Russia's eastern Siberia.
Hou Qijun, a geologist with Daqing Oil Field Corp, told Xinhua News Agency Thursday that the two neighboring countries will develop oil fields in the Irkutsk-Sakha region of Siberia.
Russian oil giants ROSNEFT and UKOS will be partners with Daqing, Hou said. China has followed a pro-development policy of overseas oil fields and multi-channel petroleum imports. It is believed that Siberia has as much as 11.5 billion tons in oil reserves.
Hou said Daqing will provide technology and funding to its Russian partners for the project, estimated to cost more than US$10 billion, Xinhua News Agency reported.
The fields that would be explored are located 1,000 km from the China-Russia border. According to Russian sources, only a small portion of oil reserves has been found in eastern Siberia, which is limited by technology and funds from further exploration.
In a related development, China National Petroleum Corp, Daqing's parent company, has talked with the government of the Republic of Sakha, a member of the Russian Federation, about jointly developing another two oil fields in the Irkutsk-Sakha oil-bearing areas.
Zhu Xingshan, deputy director of the Economic Center of Energy Research Institute that's attached to the State Development Planning Commission, said one third of China's oil consumption depends on imports.
He predicted that China might import as much as 250 million tons of oil, or half of the country's annual use, by 2020.
China mainly imports oil from Middle East, Asia-Pacific and African countries.
At a meeting earlier this month, the prime ministers of China and Russia signed an agreement to build a Sino-Russian oil pipeline.
The 2,400-km pipeline will link Angarsk in eastern Siberia with Daqing in northeastern China's Heilongjiang Province.
The pipeline, which will take four years to build, can transport 30 million tons of oil to China annually.
Russia is also expected to transfer oil to Japan and the Republic of Korea via the same pipeline.
The cooperation is also expected to help raise Sino-Russian trade volume to US$20 billion annually in the coming years.
The past five decades have seen the expansion of China's oil industry, which now reports an annual output of 160 million tons, compared to 90,000 tons in the 1940s.
Daqing, China's top oil field, has more than 5 billion tons of proven oil reserves and has produced 1.6 billion tons of oil since it was discovered in 1959. By the end of 2000, Daqing's annual output had surpassed 50 million tons for 25 consecutive years.
The Chinese oil industry gained momentum during the 1970s, when a number of oil fields were discovered, including the Shengli in Shandong, Dagang in Tianjin, Liaohe in Liaoning and the North China Oil Field in Hebei.
In 1978, when China opened to the outside world, the country became one of the world's major oil producers, with that year's output hitting 100 million tons.