China's Energy Appetite: CNOOC Ramps Up Production Goals, Eyes Overseas Assets
If there is any doubt that China is emerging from the recession with a renewed and increasing hunger for energy, take a look at what the country's largest offshore oil explorer is planning to spend this year in hopes of finding and producing more resources.
China National Offshore Oil Corp., or CNOOC, wants to increase oil and gas production 27 percent this year to as much as 290 million barrels of oil equivalent, the company announced Tuesday in its capital expenditure release. CNOOC has nine new offshore projects that are expected to come on line in 2010. CNOOC's production targets are based on crude oil prices forecast at $75 per barrel.
CNOOC also is ramping up its exploration efforts this year in deepwater and natural gas. Its 2010 exploration program will include 98 wells, 21,000 kilomters 2D seismic and 11,800 square kilometers 3D seismic.
To accomplish all of this CNOOC plans to spend upwards of $7.93 billion, a 29.5 percent increase in its capital expenditure budget from 2009.
The biggest hurdle for China is successfully buying up overseas assets, one of the reasons why CNOOC's focus remains off the coast of China. Although the company still has overseas aspirations.
CNOOC and other state-owned energy companies have had some success with snapping up international assets, although not nearly as much as they would like. CNOOC failed in 2005 to buy U.S.-based Unocal;and Aluminun Corp, known as Chinalco, had agreed to buy a large stake in Australia's mining company Rio Tinto before the $19 billion deal was rejected by shareholders.
There has been some success as well. CNOOC bought late last year a minority stake in four prospects in the Gulf of Mexico from Statoil; Sinopec, the country's state-owned oil company, was successful last year in scooping up Switzerlands's Addax Petroleum for more than $7 billion; Sinochem Corp. bought British oil and gas explorer Emerald Energy in October; and China National Petroleum Corp. with majority partner BP successfully secured a contract to develop the Rumaila field in southern Iraq.
Based on comments by CNOOC's president Yang Hua, the company and China will continue to try and expand its overseas operations with foreign partners, according to a WSJ report.