BEIJING, May 31 (Xinhuanet) -- China's biggest oilfield discovery in a decade has been made in northwestern China's Gansu Province, the China National Petroleum Corp (CNPC) has revealed.

    According to Monday's China Daily, The new supply of "black gold" is expected to help stabilize domestic supplies as production declines at most of the nation's ageing oilfields.

    The oilfield, located in the Xifeng area of the southwestern Erdos Basin in Gansu Province, boasts proven oil reserves of 108 million tons. The proven reserve may further increase as the area also contains another 327 million tons of controlled geological oil reserves, some of which could be later confirmed as developable resources.

    And the reserve could become even larger as the initial geological investigation shows the potential in adjacent areas, CNPC said.

    A senior geologist at CNPC's exploration research institute predicted that such a "medium-sized" oilfield may have an annual production of between 2 and 3 million tons.

    Annual production from Xifeng will initially be 930,000 tons, a figure that the firm hopes to increase to 2 million tons in 2006.

    The Erdos Basin covers Shaanxi, Gansu and Shanxi provinces and the Ningxia Hui and Inner Mongolia autonomous regions. The loess-dominant basin is believed to have oil and gas resources equivalent to 2.85 billion tons, CNPC said.

    The company started exploring the Xifeng area in the early 1970s. But due to the area's complex geological structure, it failed to confirm significant findings.

    "The Erdos area has great potential for oilfield development. Unlike many other areas where reserves are scattered, the reserves in Erdos are connected on a large scale," said a geologist.

    "But the problem is that geological problems hinder the oil exploration," said the geologist, warning that "production costs will not be low."

    Experts said the new oilfiled will help satisfy China's increasing appetite for oil resulting from its rapid economic expansion.

    China now is the second largest oil importer in the world after the United States.

    The nation has been working hard to maintain its domestic oil production at about 160 million tons over the past a few years. Oil companies have invested tens of billions yuan annually in their quest for oil as the nation's two largest oilfields  Daqing and Shengli  are drying up after decades of development.

    Daqing, which accounts for one-third of the nation's oil production, has announced it will cut oil production by 7 per cent annually over the next 7 years. The oilfield had produced 50 million tons annually for more than three decades until last year.

    Hoping to make new discoveries, oil firms have stepped up exploration of the vast untapped western regions, such as the Xinjiang Uygur Autonomous Region and Qinghai Province. Just 10 per cent of the western areas have so far been prospected, compared to a figure of 30 per cent for the east of the country.

    "We hope to stabilize the production in eastern areas and tap the western regions at the same time," said the geologist.

(China Daily)