HONG KONG (Reuters) -- PetroChina, Asia's top oil producer, aims to sustain crude production growth at 0.5 to 1 percent in 2007 but may raise spending by as much as a fifth this year to boost gas capacity, the firm told analysts.

PetroChina, the world's largest oil firm by market value after ExxonMobil, plans to raise spending to 180 billion to 200 billion yuan ($23.1 billion to $25.7 billion) in 2007, up from 166 billion yuan last year, according to an investment banking analyst who attended the briefing on Thursday.

More than three-fifths of that spending would go toward exploration and production, the analyst wrote in an internal note obtained by Reuters, as the corporation scrambles to fuel the world's largest energy consumer after the United States.

And natural gas output is expected to grow an average 10 to 12 percent every year until 2010, the analyst added.

Analysts had foreseen the firm's crude production holding steady or dwindling in 2007 as the oil titan focused on gas as a primary growth driver amid slipping prices for crude.

Shares of PetroChina, the largest member of a Chinese oil-producing triumvirate that includes refining giant Sinopec Corp. and offshore specialist CNOOC Ltd., fell as much as 3.5 percent on Friday before ending the day down 2.6 percent at HK$9.59.

PetroChina spokesmen would not confirm if the briefing had taken place but said oil output growth would indeed hold steady while natural gas would expand at a rapid clip. They did not confirm the capital spending but analysts thought it reasonable.

"I'm not surprised at the 20 percent increase in CAPEX, which is about the same growth rate as last year. It is higher than Sinopec, which is typical, as it's a larger company with a larger scope of operations," said Bradley Way, a Beijing-based BNP Paribas analyst. "The bulk of its CAPEX historically goes to its exploration and production business, which is its key earnings driver. Of the CAPEX increase, a good amount should go to its growing natural gas segment."

Gas prices key

According to the analyst who attended the briefing, PetroChina executives said they expected global oil prices to hover between $55 and $65 per barrel in 2007 -- level to slightly lower than in 2006.

But the picture should be markedly different for natural gas.

Chinese gas prices rose 16 percent in 2006. Way expects them to climb at about the same rate this year, especially with Beijing encouraging use of cleaner gas instead of dirtier coal.

"The natural gas pricing is very encouraging. They already own the majority of domestic natural gas reserves and they further expanded their gas reserves this year," Way said.

PetroChina's CAPEX typically does not include spending on acquisitions, he added.

In 2006, PetroChina's overall oil and gas output rose 5.2 percent to 1.06 billion barrels of oil equivalent worldwide -- narrowly beating its own 5 percent target.

Production of crude oil inched 0.8 percent higher to 829.7 million barrels in 2006, while gas output jumped 23.5 percent to 1.382 trillion cubic feet.

PetroChina's parent, China National Petroleum Corp., has said it would shoot for a 23 percent rise in natural gas output in 2007 to meet the fast-growing energy demand.

Its gas fields in the country's northwest and southwest account for the lion's share of overall gas output.