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Gas find sees CNOOC shares soar

By Ang Bee Lin (China Daily)
Updated: 2006-06-16 10:05

"Husky has only drilled one well and they have hit the jackpot," Martin Haigh, head of Asian sales trading with Cazenove Asia Ltd, said in a report yesterday. "This is one of the most significant events in offshore China since the area was opened in 1982."

CNOOC shares climbed 6.8 per cent to HK$5.60 at 3:58 pm in Hong Kong. Earlier, they rose as much as 45 US cents to HK$5.70. The shares have increased 31 per cent in the last year, compared with an 11 per cent gain in the benchmark Hang Seng Index. Husky shares, which closed at CN$63.20 on Wednesday, have risen 36 per cent in the last year.

The gas discovery has the potential to boost CNOOC's reserves by 10 per cent over the next two years should it be "proved up," Gordon Kwan, director of China oil and gas research at CLSA Ltd in Hong Kong, wrote in a note to clients yesterday. The size of the gas discovery equates to more than 40 per cent of CNOOC's proved oil and gas reserves, he said.

CNOOC's parent, China National Offshore Oil Corp, holds another exploration contract in the area with Kerr-McGee Corp, a US oil and gas company.

China's consumption of natural gas may more than double to 220 billion cubic metres (7.8 trillion cubic feet) by 2020 from 100 billion in 2010, according to a November 12 report by the State Information Center's China Economic Information Network. Gas production may rise to as much as 150 billion cubic metres by 2020 from 100 billion cubic metres in 2010, it said.

Separately, CNOOC's gas project in southeast Sumatra started production with daily output of 55 million cubic feet and delivery expected to start in early 2007, the company said on Wednesday in a statement.

CNOOC, which produced 390 million cubic feet of gas a day in the first quarter, is the operator of the project and has a 65.5 per cent interest.

"Indonesia is a big gas market, as well as a big liquefied natural gas exporter," Kwan wrote in a research note yesterday. "This project could help cement CNOOC's position as the biggest oil producer in Indonesia."