CNOOC Ltd. announces 2004 production target of 118-123 million boe

By OGJ editors
HOUSTON, Jan. 30 -- CNOOC Ltd., which produces oil and natural gas off China, said its target net production volume for 2004 is 118-123 million boe compared with an estimated 108 million boe in 2003.

In addition, CNOOC's Indonesian unit is expectd to contribute 22 million boe.

CNOOC said it is "committed to long-term production growth albeit problems" at two fields off China, QHD 32-6 in Bohai Bay and PY5-1/4-2 in the eastern South China Sea. It did not elaborate on the problems.

The exploration budget in 2004 is expected to reach $270-290 million, double the 2003 estimated expenditure. The exploration program is aimed at a reserve replacement rate of 180% in 2004, a company news release said.

The development budget is $1.6-1.7 billion. Thirteen development projects are expected to come on stream by Dec. 31, 2005. Six of those projects are slated for completion in 2004.

CNOOC said it will continue to maintain cost competitiveness. Even though offshore production costs are experiencing upward pressure, cost-cutting measures are in place, the news release said, adding that lifting costs are expected to decrease in 2005.

Gas is a core business
Natural gas production and sales will continue to be one of CNOOC's core business priorities. CNOOC's role in China's expanding LNG infrastructure could further strengthen its stake in coastal China's gas market, the company said.

CNOOC Ltd. agreed to become a partner with Australia's Gorgon gas fields joint venture participants. Its parent, CNOOC, was to purchase an undisclosed but "significant" volume of LNG directly from Gorgon for use in China (OGJ Online, Oct. 31, 2003). Before the equity purchase agreement, Chevron Australia Pty. Ltd. held a four-sevenths interest in the Gorgon development, Shell Development (Australia) Pty. Ltd. two sevenths, and ExxonMobil Corp. unit Mobil Australia Resources Co. Pty. Ltd. one seventh. CNOOC Ltd.'s equity interest was not disclosed.

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