CNOOC plans to lift capex and production
Chinese offshore oil and gas company CNOOC said on Thursday it planned to ramp up spending by at least 40% in 2018 and to raise production, thanks to a more “suitable” oil price.
The company, the listed upstream arm of state-owned China National Offshore Oil Corporation, said in a strategy presentation that it had pegged 2018’s capital expenditure (capex) at 70-billion to 80billion yuan ($11.1bn-$12.7bn).
It also forecast that net oil and gas output would rise to between 470-million and 480million barrels of oil equivalent (boe) from an expected 469million boe in 2017.
CNOOC undershot its 60billion to 70-billion yuan capex guidance for 2017 by a long way, with actual expenditure estimated to have come in at 50billion yuan. There were many factors behind the lower spend, a CNOOC official said in Hong Kong, including the postponement of some projects and good cost control.
Like its global peers, CNOOC responded to the oil price collapse from mid-2014 with three years of belt-tightening, before raising capex in 2017.
Crude oil prices have gained 32.5% over the past six months to about $70 a barrel because of supply cuts by major producers. The oil price was “suitable” at present and CNOOC would be able to invest more if it rose further, the official said, adding that “2017 was a lot better than 2016 but 2018 will be even better”.
The 2018 output guidance is based on a Brent price of just $53 per barrel. The official said this was not a forecast but a budget price at which the company should be able to meet all 2018’s targets. Five new projects were set to come on stream in 2018, CNOOC said, including four offshore China and the Stampede deepwater field in the Gulf of Mexico, in which CNOOC has a 25% interest.
The company’s latest production forecasts for 2019 and 2020 are 485-million boe and 500-million boe, respectively.
The ramp-up of overseas projects could help CNOOC beat its targeted compound annual growth rate of 2.2% to 2020, Sanford Bernstein analyst Neil Beveridge said.