Announcement of China to Carry Out Major Oil Exploration on May 31, 1984

FOR IMMEDIATE RELEASE World Bank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A. WORLD BANK NEWS RELEASE NO. 84/81 Contact: P.B. Sison May 31, 1984 (202) 477-3573 CHINA TO CARRY OUT MAJOR OIL EXPLORATION China is embarking on a project to explore the potential of the Karamay oilfield, located in the Junggar Basin in the northwest. The project is a part of the country's efforts to develop new sources of oil as existing major fields begin to decline. The World Bank is supporting the project with a loan of $100.3 million. An important objective of the project is to introduce modern technology and methods to the petroleum industry in China. This will expand a process started by two earlier World Bank-assisted projects. The Junggar basin covers about 130,000 square kilometers and is part of the Xinjiang Autonomous Region. Recoverable reserves of light oil at the Karamay oilfield are estimated at 30-40 million tons. Additional reserves likely to be established by the exploration project are put at 300 million tons of light oil and 1 billion tons of heavy oil. The project includes seismic surveys and drilling of about 530 exploration or appraisal wells. A seismic data processing center will be upgraded, and a computer center for the field operation will be established. A series of technical studies designed to reduce the geological risks of the project will be carried out. Consultants will assist in preparing the technical studies which will include a study of the potential demand for natural gas from the South China Sea. Funding will be provided for the design of pilot projects for thermal recovery of heavy oil, and for studies to evaluate refining methods. A training center for skilled workers will be established. Professionals will receive training locally or attend study tours abroad. The World Bank loan is for 15 years, including three years of grace, with a variable interest rate, currently at 10.08 percent, linked to the cost of the Bank's borrowings. It also carries an annual commitment charge of 0.75 percent on undisbursed balances and a front-end fee of 0.25 percent on the amount of the loan. NOTE: Money figures are expressed in U.S. dollar equivalents.