China’s Cnooc raises 2024 output and capex targets to record levels

CHINESE state oil and gas company Cnooc has lifted its 2024 production target by about 8 per cent to a record 700 million to 720 million barrels of oil equivalent (boe) as it raises annual capital spending to new highs.

The offshore oil and gas specialist produced about 675 million boe last year, exceeding its goal of between 650 million and 660 million boe, Cnooc said in a statement outlining its annual strategic outlook on Thursday.

Domestic production will account for 69 per cent of the company’s total output in 2024.

New domestic production this year will come from oilfields off China’s Bohai Bay and deep sea natural gas operations in the South China Sea, as well as onshore coalbed methane projects.

Internationally, the company said it expects strong production growth from the Mero-3 project in Brazil.

The company’s reserve replacement ratio will not be lower than 130 per cent this year, Cnooc’s CFO Wang Yufan told reporters.

Cnooc targets net production of 780 million to 800 million boe in 2025 and 810 million to 830 million boe in 2026, the statement added.

However, Wang said it would be “very difficult” to maintain this rate of growth beyond 2026 due to the natural decline of their wells.

“Our growth now and our growth in the past few years should not be compared,” Wang said.

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The company plans capital spending of between 125 billion yuan (US$23.4 billion) and 135 billion yuan this year, potentially exceeding the previous record of 128 billion yuan in 2023, to further support reserves and production growth.

Global oil prices around US$65 a barrel would be an acceptable level, said CEO Zhou Xinhuai, adding that the company’s main priority was cost control.

When asked about the company’s plans for its 10 per cent stake in the now-sanctioned Arctic-2 LNG project in Russia, company executives said they were following events closely. The company would deal with the matter appropriately, they said without providing any details.

A Beijing-based industry official told Reuters in December that Cnooc had asked the US Treasury for exemptions from the sanctions Washington had imposed on the project.

“The influence of US sanctions on our main projects at home and abroad is controllable so far,” Zhou said. REUTERS