Landmark Oil Find Fuels PetroChina Share Rally

Shares in PetroChina, Asia's largest oil and gas producer, surged as much as 12% on Friday after it unveiled one of the world's biggest oil finds this decade.

But analysts said that while the discovery in China's Bohai Bay -- which the firm said held proven reserves of nearly 3 billion barrels -- could boost PetroChina's oil production, they awaited details on how quickly operations could be ramped up.

By late morning, the stock was trading up 11% at HK$9.88, gaining some US$20 billion in value. It had shot up to just a whisker off HK$10 -- a level not breached since January.

"Given the size of the reserves, the discovery could transform PetroChina from a company struggling to hold oil production flat to a company with strong crude growth in the coming years," said Citigroup's Graham Cunningham.

PetroChina , in which investment guru Warren Buffett is a shareholder, said late on Thursday that its Jidong Nanpu field contained proven reserves of 405.07 million tons of oil equivalent, or nearly 3 billion barrels.

The find had total oil and gas reserves of 1 billion tons (7.3 billion barrels) of oil equivalent, the firm added.

The discovery, near Beijing, could surpass the entire reserves of offshore rival CNOOC , the country's third-largest oil producer, said an analyst at a major European investment bank.

"Given that the oilfield is so close to demand centers of Beijing and Tianjin and it's in shallow waters, I'm sure they will start production quite soon, although it may take many years for it to be fully developed," the analyst added.

He expected production to start in 2009, with initial capacity of 100,000 barrels per day (bpd). Capacity could rise to 500,000 bpd in 10 years.

The discovery could be the world's biggest since Kazakhstan's 2-billion-ton Kashagan field was located in the Caspian Sea in 2000. The Kashagan field is due to pump some 1.5 million bpd after investment of tens of billions of dollars.