The first oil is expected to be pumped from the Bohai Bay off the coast of Northeast China in the third quarter of this year, says Kerr-McGee Corporation, one of the world's biggest independent oil and gas exploration companies.

This follows a decade of exploration off the Chinese coast, and will actually be ahead of schedule as the first oil was initially expected to flow in the fourth quarter of this year.

David Hager, the firm's senior vice-president for worldwide oil and natural gas exploration and production, said the company's initial plan had been to pump 150 million barrels of oil from Bohai Bay's CFD 11-1 and CFD 11-2 oilfields. More production is expected in 2006 when the second phase development starts.

"The Bohai Bay development continues to move along ahead of schedule," Hager said, "We are very pleased with the progress we have made in China this year."

Kerr-McGee won the risk exploration rights in Block 04/36 of Bohai Bay in 1994, discovering the oilfields in 1999.

Kerr-McGee, as the operator, has a 40.09 per cent interest in the fields, with China National Offshore Oil Corp holding 51 per cent and US's Ultra Petroleum taking 8.91 per cent.

Hager also said the company is planning the development of other discoveries made last year in the area with CNOOC.

Meanwhile, the company plans to drill additional wells this year in Bohai Bay, which is believed to have great development potential.

"We believe that the China offshore basins provide significant potential as proven petroleum basins," he said, "Kerr-McGee hopes to take advantage of the infrastructure growth in these basins that will be built to support the huge energy demand in China as the country's economy grows."