LI, Tao @ Hong Kong

Cnooc Ltd, the largest offshore oil and gas producer in China, said it produced a total of 80.9 million barrels of oil equivalent in the third quarter in 2011, down 9.1 percent from the same period last year as it shut the country’s largest field after an oil spill.

However, the company posted a 23.7 percent gain in third-quarter revenue from a year earlier as it benefited from rising oil and gas prices, Cnooc told the Hong Kong Stock Exchange on Wednesday.

Sales revenues for the quarter ended September 30 reached 46.26 billion yuan. The average oil price rose 50.3 percent year-on-year to $112.04 per barrel while its gas price increased 20.0 percent to $5.18 per thousand cubic feet from the same period last year, the company said in the statement.

The company only provides full profit statements for its interim and full-year results.

Cnooc cut its annual production target by as much as 9.3 percent on August 25 as it was ordered the close the Penglai 19-3 field – 51 percent owned by the company – after a serious oil leak occurred in June.

The full suspension of drilling operations at the oilfield in Bohai Bay will lead to a loss of 62,000 barrels a day of oil production, the company said in a separate statement in September.

The leaks have been contained and it was waiting for the order from the State Oceanic Administration to decide when to resume production at the oilfield, Cnooc Chief Financial Officer Zhong Hua told reporters during a teleconference on Wednesday.

“Cnooc will have a hard time meeting its 2011 production target, which has already been revised lower,” said Neil Beveridge, a Hong Kong-based energy analyst at Sanford C Bernstein & Co. “The shutdown of the Penglai field is likely to continue until year end and it will take time to ramp up production to previous levels.”

Linus Yip, an analyst from First Shanghai Securities, told China Daily that Cnooc may also have strategically cut back production as crude oil prices have seen some turbulence lately.

Energy firms including Cnooc will also be subject to the new resource tax instead of royalties on November 1. The Finance Ministry on Monday announced that the tax will be “temporarily” set at 5 percent of sales.

Zhong said the new resources tax will have a “fairly small” impact on Cnooc as preliminary estimates show the new levy on the group will be limited to a profit loss of below 5 percent during the next few quarters, since production sharing contract (PSC) fields will continue to pay royalties until the contract expires.

About 80 percent of the production is currently generated from its Chinese business, among which nearly half are PSC fields. Zhong added that the company also gets tax breaks from exploring aging oilfields and drilling in geologically difficult terrain.

Shares of Cnooc climbed HK$0.12 or 0.83 percent in the city on Wednesday. The shares have slumped 21 percent in Hong Kong trading this year, compared with the 17 percent drop in the benchmark Hang Seng Index.

Bloomberg contributed to this story.

litao@chinadailyhk.com
China Daily
(HK Edition 10/27/2011 page2)
http://www.chinadaily.com.cn/hkedition/2011-10/27/content_13984020.htm

Hong Kong’s grade A office rents are the world’s most expensive and continue to grow, property consultancy Colliers International said in a report released Monday.

The city’s grade A annual gross rent per square foot reached $213.7 as of June 2011, up 32.4 percent from $161.4 a year earlier, according to the report which covers 173 office markets in the world.

Hong Kong is followed by London’s West End and Paris, where rents stood at $150.2 and $111.9 per square foot a year in June 2011, representing an increase of 15.9 percent and 21.9 percent from $129.6 and $91.8 last year, respectively.

Tokyo and Singapore ranked the second and third most expensive cities for office rent in the Asia Pacific region, and the fourth and seventh most expensive, respectively, in the world, according to the report.

Rents in the two Asian cities were recorded at $104.9 and $87.0 per square foot per year as of June 2011, up 4.1 percent and 49.7 percent from $100.8 and $58.1 in the corresponding period in 2010.

Mark Price, director of business space, Greater China from DTZ, said in an email to China Daily on Monday that factors including low vacancy, limited new supply as well as mainland economic growth have become the main factors drivng Hong Kong’s rents.

The vacancy rate in the prime Central district as at the end of September 2011 was 2.6 percent.
When vacancy rates fall below 5 percent, the rent trend is usually upwards and vice versa, according to Price.

“There is very little new supply coming to the market over the next few years. So landlords are not under the same pressure of previous cycles such as 1998 or 2003 when significant new supply coupled with regional crisis forced rents down to a fraction of today’s levels,” Price said, adding that the Chinese mainland’s continued growth has been the main factor behind the huge growth of Hong Kong’s financial sector.

Another study dated October 6 by the Royal Institution of Chartered Surveyors suggested a further fall in office vacancy rates in Hong Kong in the very near term, due to “substantial decline in supply versus the underlying strength of the Hong Kong economy”.

A serious shortage in Grade A office buildings is detrimental to Hong Kong’s competitiveness, and multinationals will be deterred from entering or expanding in the city, it said.

“Although Asia registered rising rent and lower vacancies in the third quarter of 2011, demand for office spaces in the region showed signs of weakness amidst increasing concerns over the European sovereign debt crisis and uncertain growth prospects in the United States,” said Collier’s Simon Lo, executive director of research and advisory, Asia.

“Individual multi-national corporations are expected to give a pause to their expansion plans, or even consolidate, while some local enterprises in the region still have solid occupational demand,” said Lo.

litao@chinadailyhk.com
China Daily
(HK Edition 10/25/2011 page2)
http://www.chinadaily.com.cn/hkedition/2011-10/25/content_13966004.htm

Chongqing may be a bit late in implementing a subsidized housing program. But with the kick-off of an ambitious plan that will accommodate millions of residents, the biggest mainland city is now on the express lane. Li Tao reports.

Xiao Xia, 25, has been working in Chongqing for a few years. The five-member family from neighboring Sichuan province – Xiao and his wife, child and parents – settled in Chongqing earlier this year, as the municipality’s first batch of public rental homes was launched in the first half.

Looking similar to most of the commercial real estate currently on the market, the apartment Xiao was admitted to is an 80-square-meter unit with three bedrooms and one living room. It costs Xiao only 800 yuan a month – around half of what it would cost at market rates for privately-owned ones.

What’s more, if Xiao prefers, he can buy the apartment in five years.

Xiao said he was lucky to become the first group on board in Chongqing. “Once we heard the news, we applied for public rental housing immediately.”

In fact, it is not that difficult to get lucky in Chongqing. In the first round of the lottery in March, the Chongqing local government received a total of 22,317 eligible applications, among which 15,281 were allocated homes immediately, representing a 68.5 percent success rate.

Tang Huali, deputy director of the Chongqing Public Rental Housing Administration, told China Daily that if an applicant fails to be chosen after three rounds of applications, the unlucky person will be assigned a place automatically.

Unlike most Chinese cities which filter residents by their household income, the program in Chongqing opens the door to any local family whose per capita housing floor space is below 13 square meters.

The municipality established an even lower threshold for people from outside the city. Any adult migrant workers, university or technical school graduate students that have a stable job in the city are all qualified to apply for public housing.

Chongqing’s generosity is backed by its three-year public rental housing project, which is tipped to build 40 million square meters of apartment buildings from 2010 to 2012 to house 30 percent low and middle-income people who are over the age of 18 and live in the city.

This year alone, it will open 10 million square meters of public housing for applications, which is nearly half of the total area of commercial housing sold in the city proper in 2010.

All 21 development projects in the blueprint, no matter whether downtown or in the suburbs, will be connected by the city’s 16 metro and subway lines, bus networks, as well as supporting facilities.

Mayor Huang Qifan told a group of Hong Kong media in October that the Chongqing government aims to solve the living issue for as many as 2 million people in the city under the program – by providing affordable rents and reasonable prices so residents can buy a home of their own.

“We have wound up three lottery rounds for public rental housing this year and we did not find any fraud or corruption” said Huang.

The program offers homes ranging from 35 to 80 square meters to accommodate the needs for one single graduate student to families of four and above. Dwellers will also be able to change to a home of another size subject to the amount of people in them.

The tenants are subject to tight scrutiny to prevent subleases as these public homes are only rented for 9 to 11 yuan per square meter depending on the location, according to the mayor.

Although renters are able to purchase their apartment five years after living there, they are only allowed to resell it to the government at its purchase price to stop speculators from gaining profit through the program.

“We are trying to control the comprehensive costs to below 3,000 yuan per square meter,” said Tang, the deputy director of the program.

“If nearby properties were sold at around 8,000 to 9,000 yuan per square meter, our public rental housing sold to our tenants would probably be around 4,000 to 5,000 yuan per square meter,” he added.

According to the mayor, Huang, public housing will cost the government a total of 140 billion yuan, of which 60 billion yuan will be subsidized by the government while the other 80 billion yuan will depend on various sources of financing.

However, the total rent that the government will be able to collect from the program will only amount to around 4 billion yuan a year, according to Tang, which is just enough to cover the interest fees of the financing.

According to the Chongqing Finance Bureau, the local fiscal revenue of the municipality stood at 199.1 billion yuan in 2010, up 70.8 percent from a year earlier.

Revenue exceeded 200 billion yuan for the first time in September 2011, which increased by 57.3 percent to reach 204.3 billion yuan for the first nine months of the year.

Five year later when people start purchasing their public homes, the government can start repaying these loans, Tang said.

litao@chinadailyhk.com
(HK Edition 10/22/2011 page2)
http://www.chinadaily.com.cn/hkedition/2011-10/22/content_13953456.htm