Cnooc Ltd, the largest offshore oil and gas producer in China, said it is set to produce 330 to 340 million barrels of oil equivalent (BOE) in 2012, up 2.4 percent from last year, along with the launch of several new offshore projects in the mainland — drivers of future production growth — coming on stream.
Net production last year is estimated to stand around a total of 331 to 332 million barrels of oil equivalent, the oil refiner announced in Hong Kong on Wednesday.
It is at the lower end of Cnooc’s revised target of 331 million to 341 million for 2011, in comparison with an output of 328.8 million barrels of oil equivalent in 2010, according to its annual report released in March last year.
Cnooc maintains the target to achieve 6 to 10 percent compound annual growth rate (CAGR) on production from 2011 to 2015, Li Fanrong, chief executive officer of the company said at a media briefing on Wednesday.
Four new projects in offshore China are expected to be put into operation this year — two in western South China Sea and two in eastern South China Sea — and the Long Lake oil-sands project in Canada and the Missan oilfield in Iraq are due to start contributing to production this year, according to the company.
Capital expenditure is expected to rise to $9.3 to $11.0 billion in 2012, an increase up to 63 percent from the forecast for last year, to accelerate the exploration and development of deepwater and unconventional energy, which have huge resource potentials, said the company.
Zhong Hua, chief financial officer of the company, said the government’s favorable policies will nevertheless aid Cnooc to save cost as the threshold of the special oil gain levy was increased to $55 per barrel from the previous $40 per barrel effective from Nov 1, 2011.
Shares of Cnooc climbed HK$0.14 or 0.90 percent to close at HK$15.76 in the city on Wednesday, compared with the 0.30 percent gain of the benchmark Hang Seng Index.
The stock has slumped about 18 percent in Hong Kong trading throughout 2011, lagging behind its competitors China Petroleum & Chemical Corp and PetroChina Co, which gained 18 percent and 4.8 percent respectively.
Cnooc’s price-earnings ratio (P/E ratio), which used to be among the top three Chinese oil producers, is now the worst as investors are cautious about its prospects due to the slower production progress, according Louis Wong, director of Phillip Securities.
“The market may also worry that the company will again (become) involved in serious oil leaks as it did last year,” Wong told China Daily in a telephone interview.
Cnooc cut its annual production target by as much as 9.3 percent from 365 million barrels of oil equivalent on Aug 25 as it was ordered to shutdown the Penglai 19-3 field — 51 percent owned by the company – after a serious oil leak occurred in June, 2011. The incident caused a loss of 5.9 million barrels of oil equivalent, and production in the field has yet to be resumed, the company said on Wednesday.
China National Offshore Oil Corp, parent of Cnooc, said earlier this month that 29 fishermen had sued the company for 234 million yuan ($34 million) for economic losses following the oil leaks. Li said the outcome is hard to estimate or comment.
China National Offshore Oil Corp, on the other hand, set up a foundation aimed at environmental protection in December 2011. Li added that the Hong Kong-listed Cnooc has contributed 500 million yuan ($79 million) as initial capital for the foundation.