PetroChina is applying for exploration and production licenses for the South China Sea, a move that could challenge CNOOC's dominant position in China's offshore oil and gas sector.

PetroChina's oil and gas exploration and production is largely confined to onshore basins in the northeast and northwest, except for a few shallow sea blocks in the Bohai Sea.

The government recently adopted a policy of encouraging Chinese oil and gas companies to initiate hydrocarbon exploration in basins traditionally explored by rival companies.

China's offshore oil output last year reached 21 million tons, up 4.2 percent over 2002.

(CRI.com July 2, 2004)