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Natural gas discovery in South China Sea

Jocelyn Ford Jun 15, 2006

TEXT OF STORY

MARK AUSTIN THOMAS: Today in Asian trading, shares of Chinese oil company CNOOC soared more than 6 percent on news of a big, new energy find deep under the South China Sea. The discovery boosts China’s existing natural gas reserves by 7 percent. In Beijing, Jocelyn Ford has more.

JOCELYN FORD: So how big is the find?

DAVID HURD: It’s a guerilla find, let’s put it that way. There are not many left in the world.

Energy analyst David Hurd says it’s enough gas to replace China’s entire oil consumption for almost half a year.

The discovery comes at a time when China plans to increase its use of natural gas. Gas doesn’t pollute as much as China’s main energy source, coal.

But even with this find, Hurd says progress will be slow.

HURD: It’s very difficult to compete against the low cost of coal.

For example, it costs about 30 percent more to generate electricity with natural gas than with coal.

Hurd says the Chinese oil company CNOOC and its partner Husky might even decide not to sell the gas to China .

That’s because the Beijing government decides energy prices, so it’s hard to make big profits. Right now, natural gas sold on the world market fetches three times more than gas sold in China.

In Beijing, I’m Jocelyn Ford for Marketplace.

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