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Phillips Pumps Cash into Oil
US-based oil giant Phillips said it expects to reinforce its investment in the Xijiang oil field, one of the largest oil fields in South China Sea, to raise its production.

The company, together with partners -- including Royal/Dutch Shell and China National Offshore Oil Corp (CNOOC), the nation's third largest oil company -- plans to pump 150 million barrels of oil from the blocks in the coming four years, according to Phillips' Deng Zhiyun, general manager of the Xijiang project.

By then, the accumulated production of Xijiang 24-3 and 30-2 fields since they went into production in 1994 will have reached a total of over 350 million barrels.

"Definitely, we will enlarge our investment in the development of these oil fields," said Deng. "The prospects are much more encouraging than expected."

To increase its reserves, Deng said, Phillips is exploring the nearby areas of the existing two blocks, which were the company's first offshore oil discovery in China.

"The areas enjoy great potential for more discoveries," Deng told China Daily.

The two pockets, located 128 kilometers south of Hong Kong, have yielded 210 million barrels since going into operation. Daily production peaked at a record 147,000 barrels, and now averages 80,000 barrels.

Phillips and Shell each hold a 24.5 percent interest in Xijiang 24-3, while CNOOC controls 51 percent. In the 30-2 block, Phillips holds 12.5 percent, Shell 47.5 and CNOOC 40 percent.

Deng did not say how much Phillips will invest in the two fields for further development, but he added that more investment will be used for equipment upgrading and personnel training.

The expansion in Xijiang is part of Phillips' commitment to enhancing its presence in the Chinese market, where oil consumption is expected to increase by 4-6 percent annually.

The company said in a newsletter that its global capital expenditures will rise by 13 percent to US$3.5 billion this year, and that China's market will play a "key strategic role" in its investment.

Earlier reports said Phillips is planning to invest US$2.65 billion in China in coming years.

(China Daily June 21, 2002)

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