CNPC in Latin America: A Responsible Investor
Win Trust with Technology
Talara oilfield in Peru has a 100-year history of exploration, and is hence one of the oldest in existence. The Talara field stopped production for an extended period, during which it teetered on the brink of abandonment. Up until 1994, when CNPC took over its operation, five petroleum companies using various technologies had run the oilfield.But experts were generally agreed that it had no tappable potential. There were at that time 5,000-odd wells in blocks No. 6 and No. 7. Only one-10th were in production, with an average daily output of just three barrels per well, most of them buried in weeds, sand, and rubble.
The geological conditions of the Talara oilfield are similar to that in China’s Bohai Bay Basin. CNPC utilized the comprehensive and mature mining technology used in China’s older oilfields and made distinct achievements. Workers successfully drilled Talara’s deepest oil well and developed many others, producing a daily output in excess of 1,000 barrels each, and built Peru’s first horizontal well. CNPC also took measures to restore and tap the potential of wells that had long since stopped production.
All these efforts greatly boosted Talara oilfield yields. In just three years the old, virtually abandoned Talara oilfield had been revived. Its annual output of crude oil increased from 600,000 barrels to 2.2 million barrels.
This was CNPC’s first overseas oilfield project in Latin America. The situation of most oilfields on the continent is similar to that of Talara, in that their late stage of development makes further exploitation difficult. Raising their output is hence a big challenge.
CNPC successively took over many old oilfields in Venezuela and Ecuador. Having figured out the distribution of the remaining oil, the company formulated a system of integrated mining and technology management to resolve the complicated conditions in old oilfields in order to regenerate them. One outstanding result was the restored output of the as good as abandoned Caracoles Oilfield in Venezuela to around that of its historical high, in less than three years.
Chinese technology thus revived many old oilfields and created more job opportunities. The proportion of local staff in CNPC branch companies in Latin America, including field workers and administrative staff, now exceeds 88 percent.
CNPC has gradually earned the approval of its Latin American peers in the oil sector. Many have indeed benefited from sharing CNPC’s experience and technology, as regards prospecting and exploitation of complicated oil and natural gas deposits, increasing the reserves and output of old oilfields, super heavy oil production, and construction of horizontal wells. In July 2014 during President Xi Jinping’s four-nation visit to Latin America, CNPC signed new oil and natural gas cooperation agreements with Venezuela and Cuba.
Improve Local Life
The coming of this Chinese company has brought both job opportunities and a better community life to residents living near CNPC oilfields.
CNPC, together with local governments and non-governmental organizations in such countries as Venezuela, Ecuador, and Peru, has launched public welfare activities in education and health care, and construction projects to improve local infrastructure.
In light of the situation of some indigenous communities living in remote areas deep in the rainforest, CNPC sent mobile medical teams to provide medical treatment and medicine. CNPC also established communication stations to help residents in remote areas maintain contact with their nearest cities. The CNPC joint venture in Venezuela played a proactive role in housing construction by sending its staff to work as volunteers on government-organized housing projects, so benefiting more than 10,000 local residents.
Casio Ceco is a small Indian village in El Tigre, a key oil city in eastern Venezuela. CNPC fostered a local cassava planting project, so helping the village develop into an important processing area.
The village, which houses over 50 families, used to be a relatively poor area. In 2005, after carrying out an evaluation, CNPC included the village in its community development plan. The company invited agricultural experts from Guangxi Agricultural Reclamation Bureau to study the natural environment, soil, and local labor resources. It then decided to promote the development of local cassava cultivation and processing industry.
Cassava cake is the staple food of local inhabitants. In May 2005, in a joint venture with Venezuela’s PDVSA, CNPC invested in the construction of a 30-hectare cassava growing demonstration zone in Casio Ceco. A family member from each local household participated in this project, and villagers elected their own managers to ensure its efficient operation. In 2007, CNPC allocated a further US $240,000 towards construction of a cassava processing factory. It is now the second largest cassava processing factory in Anzoátegui State, whose output is the third highest in Venezuela.
