Plans to start deepwater exploration, accelerate extraction of shale gas

China National Offshore Oil Corp Ltd, the country’s biggest marine oil producer, reiterated its goal of keeping its net output at 330 million to 340 million barrels of oil equivalent this year, and having up to 30 percent of that come from overseas.

CNOOC reported oil and natural gas production of 331.8 million BOE last year, which was almost unchanged from 2010.

The suspension of the Penglai 19-3 oilfield, which started last September, curtailed its total output, the company said in its annual results.

In 2011, overseas production made up more than 20 percent of the total.

Three foreign projects – a US shale oil venture, a one-third interest in three exploration areas in Uganda and the acquisition of OPTI Canada for oil sands assets in Canada – began contributing to output last year, Li Fanrong, CNOOC chief executive officer, said.

Its net proven reserves hit almost 3 billion BOE, with more than 80 oil and gas fields offshore China and in more than 10 foreign countries, chairman Wang Yilin said in a statement.

Regarding overseas mergers and acquisitions, CNOOC will continue to move if projects are in line with the strategy of evaluating reserves, risks and returns regardless of world oil prices, Li said.

The upstream-oriented company reported net profit of 70.3 billion yuan in 2011, up 29.1 percent.

The results, which exceeded analysts’ estimates, were largely due to soaring international crude oil prices, which partly offset lost production at Penglai, said Wan Xuezhi, an energy analyst at the CIC Industry Research Center based in Beijing.

CNOOC said in the statement that it saw oil prices of $109.75 a barrel last year, up 40.8 percent from 2010.

The two oil spill incidents in the Penglai 19-3 oil field, the country’s biggest offshore field, resulted in a shutdown in September.

“We (CNOOC and its partner ConocoPhillips China) have submitted the revised overall development plan and a new environmental impact assessment to the government as requested,” Li said.

He added that the government had yet to approve resumption of the project.

CNOOC said it will start deepwater exploration this year. “At present, (we are) well prepared in technical expertise as well as operational and managerial capability (for deepwater exploration),” Wang said in the statement.

Deepwater resources in the South China Sea will stimulate the company’s growth in the medium and long term.

As for shale gas development, CNOOC, which lags behind its rivals China National Petroleum Corp and China Petrochemical Corp in domestic blocks, said it finished seismic surveys on its 4,800 square kilometer block in Anhui province and will drill wells.

Li said the company will be watching for auctions of shale gas exploration rights in domestic blocks, and it plans to apply the technologies and expertise acquired through participation in the Eagle Ford shale gas project in Texas.

By Zhou Yan