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GV Oil at sea.
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CU Japanese and Chinese oil workers. (2 SHOTS)
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CUs Crane lowering oil storage tank onto deck. (5 SHOTS)
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CU Japanese and Chinese workers talking. (2 SHOTS)
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GV Oil waste as workers look on. (4 SHOTS)
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TELERECORDING

Script is copyright Reuters Limited. All rights reserved

Background: INTRODUCTION: China and Japan have struck oil in a joint exploration venture in southern Bohai Bay -- about 200 kilometres (120 miles) off Tientsin in Northern China. The strike was announce by the Japan-China Oil Development Corporation -- a Japanese consortium formed to work with the Chinese. Under a 1979 agreement, Japan is to get 42.5 per cent of any oil produced over 15 years after production starts.

SYNOPSIS: Drilling began in December and by April had reached a depth of 3,300 metres (about 10,000 feet). The size of the field is not yet known but is estimated to be smaller than China's largest onshore oilfield at Daqing.

Even so, the industry believes there are big possibilities that the area could develop into fields that could produce about 10 million tonnes of crude oil a year (200,000 barrels a day).

Reports say the oil from the test well showed a quality similar to Arabian light oil produced in Saudi Arabia. China now produces about two million barrels per day from onshore fields. Western oil companies predict output could rise sharply in the mid-1980s as result of the current offshore exploration effort. China's total recoverable reserves may be around 50 billion barrels.