Chinese state oil and gas company CNOOC will boost its capital spending this year to the highest in seven years, thanks to a 5-percent increase in domestic output.
Reuters reports CNOOC aims to spend $13.9-15.5 billion this year, mainly on boosting domestic oil and gas exploration and production, which last year hit 528 million barrels of oil equivalent.
Most of the domestic output will come from offshore fields, CNOOC said, which will account for 68 percent of the company’s production target for this year. Output from operations overseas will contribute the rest. The planned total for this year is 545-555 million barrels of oil equivalent.
Like other oil companies, CNOOC last year shrank spending and cut production of oil and gas from overseas assets, as the pandemic claimed the world. The company, like its peers, focused more of its efforts on domestic production as per Beijing’s plans as the country seeks to reduce its substantial dependence on imported oil and gas.
These efforts did lead to higher production for CNOOC, but China has yet to reduce its import reliance in any meaningful way. At the same time, energy demand is rising, and so are imports.
CNOOC recently launched production at a new field in the Eastern South China Sea that could become a solid contributor to Chinese domestic output. Development of the Liuhua 16-2 oilfield cluster began in September last year, and the company eyes output of 72,800 barrels daily by 2022.
The Eastern South China Sea is one of CNOOC’s most important crude oil and natural gas producing areas, where crude is mostly of light to medium gravity.
As of the end of 2019, the reserves and production in Eastern South China Sea reached 633.9 million barrels of oil equivalent and 242,026 boe/day, respectively, accounting for 12.2 percent of the company’s total reserves and approximately 17.4 percent of its production, CNOOC said last year.