China's two leading state-run oil companies have joined the rush for offshore exploration, posing a threat to the monopoly held by China National Offshore Oil Corp (CNOOC), reports Guangzhou's 21st Century Business Herald.
CNPC and Sinopec each won a bid in February to drill for oil off the coast of Jiangsu province.
The area won by Sinopec, East Haian district, measures 3,868 square kilometers, while CNPC won the right to explore oil in East Yancheng district, which measures 3,558 square kilometers.
Under the contract with the Ministry of Land and Resources, Sinopec agreed to invest 299 million yuan (US$47.3 million) over the next three years in the exploration, while CNPC promised to invest 718 million yuan (US$113 million) over the same period.
Sinopec has begun collecting geological information pertaining to its district, although CNPC has not yet taken any action, according to the newspaper.
The large investments amount to high-stakes gambling, the newspaper said.
The newspaper quoted an industry source as saying that Sinopec's investment was only half of the amount pledged by CNPC, because Sinopec has accumulated considerable experience in exploring the Shengli oilfield in shallow waters.
The newspaper quoted a source from CNPC as saying offshore oil exploration involves difficult technological feats and large investment, and his company would have to solve these two problems before exploration could begin.
Facing the new competition from Sinopec and CNPC, Yuan Guangyu, vice president of CNOOC, said his company would invest 100 billion yuan (US$15.7 billion) in offshore oil exploration over the next five years to boost its production of natural gas to 60-65 million tons a year by 2015.