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Eric Ng

CNOOC, China's dominant offshore oil and gas producer, posted a 17.8 per cent year-on-year third-quarter rise in output, almost entirely thanks to its US$15 billion acquisition of Canada's Nexen, as domestic output fell on a dearth of new projects.
Total net production rose to 103.4 million barrels of oil equivalent (boe) in the three months to September 30 from 87.8 million boe in the year-earlier period.
Of the amount, domestic production fell 5.5 per cent to 63.7 million boe, while overseas output almost doubled to 39.1 million boe.
Chief financial officer Zhong Hua said the domestic decline was owing to a small number of new projects coming on stream.
"This is within our expectation," he said. "The decline was caused by falling output from our mature fields."
He added that overseas growth was boosted by fields in Iraq and the United States, but he declined to say whether the trend of slow domestic growth and fast overseas growth will continue.
American brokerage Sanford Bernstein senior analyst Neil Beveridge said in a research note that CNOOC's overall output growth is expected to pick up in the fourth quarter with five new projects to be commissioned, up from two in the third quarter. Growth is expected to exceed 10 per cent next year, with 11 new projects starting up.
CNOOC's domestic production growth ranged between zero and 2 per cent in 2011 and last year, compared to 6 and 6.9 per cent for overseas growth.
Domestic output took up 62 per cent of the total in this year's third-quarter, compared to 83 per cent in the full-year 2009, as contributions from overseas rose to 38 per cent from 17 per cent.
CNOOC's third-quarter oil and gas sales grew 15.9 per cent year-on-year to 56.1 billion yuan. The growth rate was slower than that of output, with a 1.5 per cent rise in average oil selling price more than offset by a 6.9 per cent fall in gas selling price owing to Nexen's lower gas price.
Zhong said CNOOC's recent deal to pay US$700 million for 10 per cent of a deepwater exploration project in Brazil will help it gain deepwater experience. It is too early to say how much it will need to invest for production to begin because it will only be known after exploration drilling and reserve assessment.
A minimum amount of work is required by end-2017, according to the investment agreement.


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China National Offshore Oil Corporation (Cnooc)

CNOOC output rises 17.8 per cent after acquisition of Nexen

CNOOC is China's dominant oil and gas producer. Photo: Reuters

Business

Commodities

CNOOC, China's dominant offshore oil and gas producer, posted a 17.8 per cent year-on-year third-quarter rise in output, almost entirely thanks to its US$15 billion acquisition of Canada's Nexen, as domestic output fell on a dearth of new projects.
