China produced 23.86 million tons of heavy oil last year, representing 13.2 percent of the country's oil output, Jia Chengzao, an academician with the China Academy of Sciences, told the ongoing World Heavy Oil Conference in Beijing.

Heavy oil - a catch-all name for oil shale, oil sand and natural asphalt - and natural gas hydrate, are becoming increasingly important substitutes for conventional energy resources in China. Production is increasing and technological advances are helping to reduce exploitation costs.

New policies will be formulated to encourage the exploitation of unconventional oil and gas resources to ease China's energy shortages, said Ma Kai, director of the National Development and Reform Commission (NDRC) on Monday.

Developing unconventional oil and gas resources has been written into the country's 11th Five Year Plan (2006-2010) as a necessary measure to meet a voracious demand for energy.

China is facing rising pressure from energy shortages as international oil demands continue to climb and conventional oil resources become scarcer.

China boasts abundant heavy oil resources and "has discovered a total of 70 heavy oil fields in 12 basins after 50 years of exploration", said Zhao Xianliang, an official with the Ministry of Land and Resources (MLR).

Five major heavy oil production bases have been established -- four offshore bases in central China's Henan Province, northern Liaoning and Heilongjiang and northwestern Xinjiang, and a fifth base offshore.

Thick oil produced by these five bases currently accounts for 10 percent of the country's total oil output.

Zheng Hu, vice president of the China National Petroleum Corporation, said that China has 19.8 billion tons of onshore heavy oil and asphalt reserves, which account for 20 percent of the country's total petroleum reserves.

Meanwhile, the country has 47 billion tons of oil shale reserves, with 16 billion tons exploitable, and has six billion tons of oil sand reserves, with half of them exploitable.

Traditionally, the NDRC and MLR only evaluated only oil and natural gas as energy resources but this year, for the first time, they will also assess coal-bed methane, oil shale and oil sand.

The latest evaluation round covered 47 basins that have coal-bed methane, 80 oil shale mines and 24 oil sand basins.

Source: Xinhua