Announcement of Petroleum Project in China to Use One Hundred Sixty-Two Million Four Hundred Thousand Dollars World Bank Loan on January 27, 1983

World Bank 1818 H Street. N.W., Washington, D.C. 20433, U.S.A. o Telephone: (202) 477-1234 BANK NEWS RELEASE NO. 83/38 Contact: Marjorie Sheen January 27, 1983 (202) 477- 5761 PETROLEUM PROJECT IN CHINA TO USE $162. 4 MILLION WORLD BANK LOAN China's largest and most productive oilfield will be further developed with the support of a $162.4 million loan from the International Bank for Reconstruction and Development. The $674.3 million project is the first Bank lending operation in China's petroleum sector. The Daqing Oilfield Gaotaizi Reservoir Development Project is expected to add.some 3 million tons a year to production from the Daqing field. This will partially offset an anticipated decline in production from current levels of about 51 million tons per annum. The Daqing field, located in northeastern China, is the country's largest and accounts for one-half of China's total oil production. About 615 oil wells and 206 water injection wells will be drilled, corr,pleted, and equipped. A wide range of current field practices, such as • drilling and cenenting, will be studied and updated. The project's overall economic rate of return is expected to be 91% . The IBP.D loa~ will be used as a vehicle for int-::-oducing modern technology into China's petroleum industry, including enhanced recovery techniques. Seismic surveys of the periphery of the greater Daqing oilfield, as ~ell as a study of the optimal development of the Gaotaizi Reservoir, will be carried out. 'Ihree operationally-oriented research laboratories and a computer center will be established and pre-investment work for future petroleum projects will be fina~ced. Skills of the oil industry personnel will be upgraded in order to · improve operational practices. Fully equipped i~raining centers will be built in Daqing field for 2,000 skilled workers, and at the Petroleum Institute in Daqing for 500 profession3.ls. Training curricula will also be reviewed. The People's Republic of China will contribute $445.9 million towards the local cost cf the project, while an additional ·$66 million in foreign exchange costs will be financed either by the government or by export or supplier£' credits. Since Hay 1980, five IBRD projects totalling $530 million have been approved for China. Two have been :i.n education, one in agriculture, one in transport, and one in industrial development financing. Implementation of each project is proceeding on schedule. The lBRD lonn is for 20 years, including five years of grace at an • interest rate linked to the cost of Bank borrowing. The lodn also carries an annual com1ni traent charge of O. 7 5% on und isbursed balances and a front-end fee of 1.5% on the amount of the loan. NOTE: Money figures are expressed in U.S. dollar equivnlents.