CNOOC Ltd. makes significant discovery in H1, Liuhua oilfield resumes production
China National Offshore Oil Corp. Ltd. (CNOOC Ltd.), the nation’s leading offshore oil and gas producer, has made a significant light oil discovery at an oilfield in the Bohai Bay, and output from its key Liuhua oilfield has returned to normal after suffering typhoon damage last year, company officials said during a press conference held in Hong Kong yesterday.
CNOOC officials said that the company had made seven new oil and gas finds during the first half of this year, and that its Jinzhou 25-1 block recorded test production of 2,898 barrels a day and 11.66 million cubic feet of gas at each of the three wells that have been drilled in the block.
“The Jinzhou discovery is expected to be developed into a large, light oil field of considerable scale in Bohai Bay,” Yang Hua, CNOOC’s chief financial officer, said.
Though the field’s volume of reserves was not disclosed, Fu Chengyu, the company’s chairman, said that the recovery rate at the field would be more than 40 percent, and that a third party will be booked to make an estimation of the field’s reserves sometime next year. Production at the field will not begin for another three to four years after that, he added.
Operations restarted at the company’s 23,000-barrel a day Liuhua oilfield in the South China Sea in late June, after operations had been suspended for more than a year due to broken rig structures located 1500 meters underwater. The field, which accounts for 5 percent of the company’s total output, had been damaged in May last year by a typhoon.
“International firms had asked for between $500 million and $600 million to repair the damage, and still could not guarantee the successful restoration of the field. Instead, we went ahead and used our own resources and expertise and managed to fix it for less than RMB 600 million ($79.47 million),” Fu said.
The Beijing-based offshore explorer recorded a 28.5 percent year-on-year increase in gas production for the first half year, while its oil output declined by 0.3 percent year-on-year to 68.1 million barrels.
The company’s net profit for the first six months of the year dropped by 10.6 percent, which was less than the market expected, as the average crude oil price earned by CNOOC during the January to June period fell by 5.8 percent year-on-year to $58.8 a barrel. At the same time, the company’s average gas price was up by a slight 1.3 percent year-on-year.
CNOOC’s profit earnings beat market expectations though because of its improved control over operational costs, Yang added.
Fu also confirmed recent media speculation that plans by China’s largest Hong Kong-listed companies, including CNOOC, to return to A-share listing have been delayed due to concerns from the Hong Kong government that such a move would significantly hurt the Hong Kong Stock Market and the overall economy of the special administrative region.
“The China Stock Regulatory Commission is currently studying whether such concerns would materialize,” Fu said.
Fu also noted that appraisal work at a natural gas discovery the company made in partnership with Husky Energy Inc. in the South China Sea last year will not start until the end of next year due to a shortage of equipment. Equipment necessary for the appraisal work is currently being built in Japan.
CNOOC had forecast in January that its oil and gas output will grow by as much as 17 percent in 2007, reaching the equivalent of 190 million barrels of oil after 10 new projects come on line. All the new discoveries the company made during the first half of this year will not have an immediate effect though, and will not contribute to oil and gas production until after 2010, Fu said.
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