Announcement of China to Undertake Five Hundred Million Dollars Petroleum Project with Support of One Hundred Million Eight Hundred Thousand Dollars IBRD Loan on March 31, 1983

FOR IMMEDIATE Rf!LE}\S-f ·. eWorldBank 1818 H Street, N.W., Washington, D.C. 20433, U.S.A.• Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 83/57 Contact: Sundaram Sankaran March 31, 1983 ( 202) 477-3653 CHINA TO UNDERTAKE $500 MILLION PETROLEUM PROJECT WITH SUPPORT OF $100.8 MILLION IBRD LOAN China's efforts to increase production of crude oil, gas, and natural gas liquids will be assisted by a $500 million project using a $100.8 million loan from the International Bank for Reconstruction and Development (IBRD). The second Bank-supported petroleum project will also continue the process of introducing modern technology to the Chinese petroleum industry. The Zhongyuan-Wenliu Petroleum Project will help develop the oil product'ion potential of the South and East Wenliu fields, which lie in the Zhongyuan basin about 500 kilometers south of Beijing. Because the fields have already been determined to contain commercial quantities of hydrocarbons, the possibility of discovering additional reserves is high. A three-dimensional seismic survey will be carried out over an area • of 100 square kilometers covering the two oilfields. Over 200 production and injection wells will be drilled in the South Wenliu field and 13 exploration and appraisal wells will be drilled in East Wenliu. All project works will be completed by 1986 and a safety expert will develop adequate safety standards. Training will be provided to Chinese engineers and technicians in the use of new oilfield equipment and in modern petroleum engineering practices. A training center and laboratories equipped to supplement operational field work will be built. Computer facilities will enable the Zhongyuan Petroleum Exploration Bureau (ZPEB) to design and operate a management information system for monitoring oilfield activities. Pre-investment studies for possible future petroleum projects will also be undertaken. A liquefied petroleum gas (LPG) plant will also be constructed to process 1 million cubic meters per day of associated gas by 1986. The People's Republic of China and the ZPEB will provide $342.3 million to meet all local costs. Suppliers' credits of $56.7 million are expected to finance the remainder of the foreign exchange costs. The first Bank lending operation in China's petroleum sector was an IBRD loan of $162.4 million approved in January 1983 to develop the Daqing Oilfield Gaotaizi Reservoir in northeastern China. • The IBRD loan is for 20 years, including five years of grace at an interest rate linked to the cost of Bank borrowings. The loan also c1rries an annual commitment charge of O. 7 5% on undisbursed balances and a front-·en<l fee of 0.75% on the amount of the loan. NOTE: Money figures are expressed in U.S. dollar equivalents.