Domestic

CNOOC lifts production target by 11 percent

By Farah Master and Alison Lui (China Daily)
Updated: 2011-01-29 09:26

HONG KONG - China's top offshore oil and gas producer, CNOOC Ltd, has lifted its 2011 production target by up to 11 percent as new projects at home and overseas come on stream.

CNOOC, with a market capitalization of about $105 billion, said in a statement on Thursday that it aimed to produce between 355 and 365 million barrels of oil equivalent (BOE), compared with estimated output for 2010 of between 327 and 329 million BOE.

Oil prices climbed 15 percent in 2010 on the back of expectations that a global economic recovery will drive demand. Analysts are similarly bullish for 2011, predicting crude prices to trade at around $100 for the year.

CNOOC, the smallest of China's triumvirate of energy companies that also includes PetroChina Co Ltd and China Petroleum & Chemical Corp, said it targeted $8.8 billion in capital expenditure for 2011, compared with a revised $5.6 billion in 2010.

The offshore oil producer said four new offshore China projects were expected to come on stream this year. While CNOOC has had a traditional stronghold in offshore China, its ageing fields have sparked production-growth concerns, putting more emphasis on securing outbound deals.

"We will maintain a robust capital expenditure plan and implement exploration and development activities as scheduled," Chief Financial Officer Zhong Hua said in the company's statement.

CNOOC said its Eagle Ford project in the United States, with Chesapeake Energy Corp, a largely shale project of oil and gas, was expected to start production soon, and its Bridas venture in Argentina would also deliver this year.

The company added that 15 new projects were under construction.

Unlike PetroChina and Sinopec, CNOOC makes almost all of its profit from exploration and production and does not have to sell fuel at State-capped prices, sometimes below costs.

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CNOOC said it would focus on oil and gas exploration in core areas, while strengthening exploration in new regions, especially the South China Sea. It aims to achieve a reserve-replacement ratio of more than 100 percent this year.

CNOOC's parent, China National Offshore Oil Corp, said in January that it planned to invest between 800 billion and one trillion yuan ($121-151 billion) over the next five years to boost production and expand overseas.

The parent has stepped up acquisitions of unconventional gas assets over the past year, buying a 50 percent stake in China United Coalbed Methane Co Ltd in December.

Last year, CNOOC agreed to a $1.1 billion deal with Chesapeake Energy Corp for a US shale oil and gas field and is pursuing a $5 billion bid with Ghana National Petroleum Corp for major fields in the West African state.

Reuters