CITIC Resources to produce 1st domestic oil in 2010

YUEDONG FIELD, BOHAI SEA, Aug 13 - Hong Kong-listed CITIC Resources Holdings <1205.HK>, China's sixth-largest oil producer by output, said on Thursday that it will start producing its first domestic crude in the second quarter of 2010 in the Bohai Sea off the coast of north China.

Company executives said the offshore Yuedong field in the Hainan-Yuedong block in Bohai would peak at around 36,000 barrels per day (bpd) in 2014.

"That (peak) volume would account for more than half of our total by then," Sun Xinguo, president and chief executive officer of CITIC Resources, told reporters on Thursday, when the company started drilling the first production well at the Yuedong block.

CITIC Resources is the oil and metals unit of CITIC Group, China's top financial conglomerate. The company has oil assets in Kazakhstan and Indonesia that, combined, produced 36,800 bpd in 2008, in which the company was entitled to around half.

CITIC Resources will invest up to 6.5 billion yuan ($951.1 million) to build production facilities in Yuedong until 2013, after earmarking $120 million for this year.

Yuedong was estimated to have recoverable proven, probable and possible oil reserves of about 63.5 million barrels, the company said.

China's offshore oil and gas sector used to be exclusively explored by CNOOC, parent of CNOOC Ltd <0883.HK>, before Beijing allowed in bigger domestic giants CNPC and Sinopec Group, but only in limited acreages.