CNPC Cuts China's Total Oil Production Goals For 2007 By 5% From 2006 - Marketwatch

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Daqing's already down to about 870Kbd - off 3.5% for the year.

BEIJING (MarketWatch) -- China National Petroleum Corp. (CNPC.YY), the country's largest oil company by capacity, has lowered its 2007 domestic crude oil output goal by 5% compared with last year.
The outlook revision could also portend higher overseas production or imports to make up for any domestic shortfall.

CNPC is targeting production of 101 million metric tons in 2007, equivalent to 2.03 million barrels a day, a company executive, who declined to be named, said Tuesday. It pumped a record 106.6 million tons of crude from its domestic fields in 2006, or 2.14 million barrels a day, up from 105.95 million tons in 2005. Last year's output was also above CNPC's 2006 target of 106.36 million tons.

The cut in CNPC's 2007 outlook is likely due to declining production from the company's aging oil fields and expectations of weaker oil prices this year, said an analyst. Domestic fields have been increasingly pressured to supply more crude to fuel China's booming economy. Last year, CNPC accounted for about 58% of the country's total domestic crude output of 183.7 million tons. CNPC's aging oil fields, including Daqing - its largest field by output, are grappling with the problem of depleting existing reserves, said Huang Meilong, an analyst at Shenyin Wanguo Securities.

The use of new technology to secure enhanced crude recovery isn't expected to be able to offset the rate of decline of aging oil fields this year, said the company executive, who was attending CNPC's annual work meeting here. Daqing's crude output fell 3.5% in 2006 to 43.38 million tons, equivalent to 871,165 barrels a day, and it is "difficult (for output) to stay above 40 million tons in the coming years," said Huang.

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