CNOOC Limited, an upstream company, engages in the exploration, development and production of oil and natural gas. The company is a subsidiary of China National Offshore Oil Corporation (CNOOC).
Proved Reserves
As of December 31, 2020, the company had proved reserves of 5,372.7 million barrels-of-oil equivalent (BOE), including 3,029.3 million barrels of crude oil; 796.7 million barrels of synthetic oil; 94.0 million barrels of Bitumen; and 8,539.9 billion cubic feet (bcf) of natural gas.
Exp...
CNOOC Limited, an upstream company, engages in the exploration, development and production of oil and natural gas. The company is a subsidiary of China National Offshore Oil Corporation (CNOOC).
Proved Reserves
As of December 31, 2020, the company had proved reserves of 5,372.7 million barrels-of-oil equivalent (BOE), including 3,029.3 million barrels of crude oil; 796.7 million barrels of synthetic oil; 94.0 million barrels of Bitumen; and 8,539.9 billion cubic feet (bcf) of natural gas.
Exploration, Development and Production
In the People’s Republic of China (China or PRC), the company engages in oil and natural gas exploration, development and production in Bohai, Western South China Sea, Eastern South China Sea, and East China Sea, as well as onshore unconventional oil and natural gas exploration, development and production, either independently or through cooperation with foreign partners under production sharing contracts (PSCs).
For PSC operations, CNOOC has the exclusive right to enter into PSCs with foreign oil companies to cooperate in the exploration, development and production of petroleum resources (including crude oil and natural gas) in offshore China, which are open to foreign cooperation.
In overseas, with the company’s diversified portfolio of high-quality assets, it holds interests in a numbers of world-class oil and gas projects. The company’s assets are scattered in more than 20 countries and regions in the world, including Indonesia, Australia, Nigeria, Iraq, Uganda, Argentina, the United States of America (U.S.), Canada, the United Kingdom of Great Britain and Northern Ireland (U.K.), Brazil, Guyana, Russia, and the United Arab Emirates.
Exploration
In offshore China, the company focuses on the exploration of mid-to-large sized oil and gas fields. In 2020, a total of 186 exploration wells were drilled, including one PSC well. A total of 4,793 kilometres of two-dimensional (2D) seismic data and 18,276 square kilometres of three-dimensional (3D) seismic data were acquired under independent and PSCs. The company made 13 new discoveries and successfully appraised 41 oil and gas bearing structures in offshore China.
Engineering Construction, Development and Production
In 2020, the company achieved a net oil and gas production of approximately 528.2 million BOE.
Region
Offshore China
Bohai
Bohai is the most important crude oil producing area for the company. The crude oil produced in this region is mainly heavy oil. The operational area in Bohai is mainly shallow water with a depth of approximately 10 to 30 metres. As of December 31, 2020, the reserve and production in Bohai reached 1,443.9 million BOE and 477,374 BOE/day, respectively, representing approximately 26.9% of the company’s total reserves and approximately 33.1% of its production.
With rich oil and gas resources, Bohai has been one of the company’s core areas for exploration and development. In 2020, the company made five successful discoveries in Bohai, namely Bozhong 8-4 South, Bozhong 13-2 deep formation, Bozhong 19-6 North, Caofeidian 28-1, and Kenli 9-2. In addition, the company successfully appraised 20 oil and gas bearing structures, including Bozhong 13-2, Bozhong 21-2, Bozhong 26-3, Bozhong 26-3 North, Bozhong 29-4, Bozhong 29-4 West, Bozhong 34-9, Bozhong 36-1, Bozhong 8-4 South, Caofeidian 2-2, Caofeidian 6-2, Kenli 10-1 North, Kenli 6-1, Luda 10-5/6, Luda 19-2, Luda 27-1, Luda 5-2, Qikou 17-2, Suizhong 36-1 North, and Suizhong 36-2.
In 2020, the company continued to appraise Bozhong 19-6 condensate gas fields, and expanded the exploration of Bozhong 13-2, which was another buried hill breakthrough after Bozhong 19-6, with proved in-place volume reaching 100 million tons. In 2021, it is expected that Bozhong 19-4 oilfield adjustment, Bozhong 26-3 oilfield expansion, Caofeidian 11-6 oilfield expansion, Caofeidian 6-4 oilfield, Jinzhou 31-1 gas field, Kenli 16-1 oilfield, Kenli 6-1 oilfield block 4-1 development project, Luda 29-1 oilfield, Luda 4-2 oilfield block 4-3, Luda 5-2 oilfield North, Luda 6-2 oilfield and Qinhuangdao/Caofeidian onshore power project will commence operation successively during 2020.
Western South China Sea
Western South China Sea is one of the company’s important crude oil and natural gas production areas. The typical operating water depth in the region ranges from 40 to 1,500 metres. The crude oil produced here is mostly of light to medium gravity. As of December 31, 2020, the reserves and production in Western South China Sea reached 843.0 million BOE and 187,311 BOE/day, respectively, representing approximately 15.7% of the company’s total reserves and approximately 13.0% of its production.
In 2020, the company made four successful discoveries in Western South China Sea, namely Lingshui 25-1 West, Weizhou 12-1, Wenchang 9-7 and Weizhou 11-6. The company also achieved a total of 12 successful appraisals, namely Weizhou 11-2, Weizhou 11-6, Weizhou 12-2, Weizhou 6-9, Wushi 1-6, Wushi 16-1, Wushi 23-5, Dongfang 13-1, Lingshui 17-2, Wenchang 19-1, Wenchang 8-3 East, and Wenchang 9-7.
During 2020, the onshore construction and the drilling of development wells of Lingshui 17-2, the first large-sized deepwater independent gas field in offshore China, were completed. It is expected to be put into production in 2021. Upon the commencement of production, Lingshui 17-2 will provide stable gas supply of more than 3 billion cubic metres to Guangdong, Hong Kong and Hainan area every year. In addition, Weizhou 11-2 oilfield phase II is expected to come on stream in 2021.
Eastern South China Sea
Eastern South China Sea is another important crude oil and natural gas producing area of the company. The typical operating water depth in the region ranges from 100 to 1,500 metres. The crude oil produced here is mostly of light to medium gravity. As of December 31, 2020, the reserves and production in Eastern South China Sea reached 592.9 million BOE and 273,719 BOE/day, respectively, representing approximately 11.0% of the company’s total reserves and approximately 19.0% of its production.
In 2020, the company made four new discoveries in Eastern South China Sea, namely Enping 21-4, Huizhou 19-14, Huizhou 25-2, and Huizhou 26-6. Furthermore, seven oil and gas bearing structures were successfully appraised, namely Enping 18-6, Panyu 34-1, Huizhou 25-2, Huizhou 25-9, Huizhou 26-6, Liuhua 27-1, and Lufeng 9-2.
As for development and production, Liuhua 16-2/Liuhua 20-2 oilfield joint development project and Liuhua 29-1 gas field development project started production in 2020. Liuhua 21-2 oilfield, Liuhua 29-2 gas field and Lufeng oilfields regional development are expected to come on stream in 2021.
East China Sea
As of December 31, 2020, reserves and production in the region represented approximately 2.8% and approximately 1.1% of the company’s total reserves and production, respectively. In 2020, the company continued to promote pioneering innovation and exploratory experiments in the East China Sea.
Onshore
The company mainly engages in the exploration, development, production and foreign cooperation of unconventional gas resources in onshore China. It has established two major production bases in the Qinshui Basin and the eastern edge of the Erdos Basin. As of December 31, 2020, reserves and production in onshore China represented approximately 1.4% and approximately 1.2% of the company’s total reserves and production, respectively.
New Energy Business
The company actively explored the development of new energy businesses, such as offshore wind power and carried out research on cutting-edge technologies by leveraging its extensive experience in offshore production, operation and management.
In 2020, the company’s first offshore wind power project located in the waters near Jiangsu was connected to the grid to generate electricity. The project has a planned installed capacity of 300 MW and plans to build 67 wind turbines offshore, which can save 280,000 tons of standard coal each year and reduce carbon dioxide emissions of 570,000 tons, equivalent to the total amount of carbon dioxide that 430,000 mu of trees can absorb each year. In addition, the second offshore wind power project, which is located near Shantou, Guangdong Province, is progressing smoothly.
Overseas
Asia (excluding China)
Asia (excluding China) is the first overseas region entered into by the company, and has become one of the major overseas oil and gas producing areas of the company. The company owns oil and gas assets mainly in Indonesia, Iraq, and the United Arab Emirates. As of December 31, 2020, reserves and production derived from Asia (excluding China) reached 326.9 million BOE and 77,017 BOE/day, respectively, representing approximately 6.1% of the company’s total reserves and approximately 5.3% of its production.
Indonesia
As of December 31, 2020, the company’s asset portfolio in Indonesia comprised mainly two development and production blocks, namely the Madura Strait and Tangguh.
The company owns approximately 13.9% interest in the Tangguh LNG (liquefied natural gas) project in Indonesia. In 2020, production of the first phase of the project remained stable with a daily net production of approximately 22,000 BOE. The construction of the third LNG train in the phase II of the project is in progress as planned.
Iraq
The company owns a 63.75% participating interest in the technical service contract of Missan oilfields in Iraq and acts as the lead contractor for the technical service of the oilfields. In 2020, the company continued to drill development wells in Missan oilfields.
The United Arab Emirates
In 2020, the company acquired 40% equity interest in the project companies of two former oilfield contract areas of China National Petroleum Corporation (CNPC), namely the Lower Zakum Shallow Water Oilfield and Umm Shaif & Nasr Oilfield in Abu Dhabi; and indirectly held 4% interest in each of such two oilfield contract areas. In 2020, the projects maintained stable production with an average daily net production of approximately 12,000 BOE.
Oceania
The company’s oil and gas assets in Oceania are mainly located in Australia and Papua New Guinea. As of December 31, 2020, reserves and production derived from Oceania reached 42.0 million BOE and 32,673 BOE/day, respectively, representing approximately 0.8% of the company’s total reserves and approximately 2.3% of its production.
Australia
The company owns a 5.3% interest in the North West Shelf LNG Project (NWS Project) in Australia. The project has commenced production and is supplying gas to end-users, including the Dapeng LNG Terminal in Guangdong, China.
Other Regions in Oceania
The company owns interests in three blocks, which are still under exploration in Papua New Guinea.
Africa
Africa is one of the regions where the company has a relatively large overseas oil and gas reserves and production. The company’s assets in Africa are primarily located in Nigeria and Uganda. As of December 31, 2020, reserves and production in Africa reached 77.5 million BOE and 90,750 BOE/day, respectively, representing approximately 1.4% of the company’s total reserves and approximately 6.3% of its production.
Nigeria
The company owns a 45% interest in the OML130 block in Nigeria. The OML130 block is a deepwater block comprising four oilfields, namely Akpo, Egina, Egina South and Preowei.
In 2020, Akpo oilfield maintained stable production, with a daily net production reaching approximately 41,000 BOE. Egina oilfield began to implement the production curtailment of the OPEC in May 2020, with a daily net production reaching approximately 44,000 BOE.
In addition, the company holds a 20% non-operator interest in Usan oilfield in the OML138 block in offshore Nigeria, and an 18% non-operator interest in the OPL223 and OML139 PSC, respectively.
The company will continue to carry out further integration to establish an oil and gas production base in West Africa centred in Nigeria.
Uganda
The company owns a one-third interest in each of EA 1, EA 2 and EA 3A blocks in Uganda. EA 1, EA 2 and EA 3A blocks are located at the Lake Albert Basin in Uganda, which is one of the most promising basins in terms of oil and gas resources in onshore Africa. In 2020, the company fully facilitated the negotiation of the framework agreement for the long-distance transmission pipeline project in Uganda.
Other Regions in Africa
Apart from Nigeria and Uganda, the company also owns interests in several blocks in Senegal, the Republic of the Congo and the Gabonese Republic.
North America
North America has become the company’s largest overseas oil and gas reserves and production region. The company holds interests in oil and gas blocks in the U.S., Canada, Mexico, and Trinidad and Tobago in North America. As of December 31, 2020, the company’s reserves and production in North America reached 1,087.7 million BOE and 143,949 BOE/day, respectively, representing approximately 20.2% of the company’s total reserves and approximately 10.0% of its production.
The U.S.
The company owns interests in two onshore shale oil and gas projects in the U.S. and two offshore deepwater projects in the Gulf of Mexico.
The company holds 27% and 12% interests in Eagle Ford and Rockies, respectively, which are two onshore shale oil and gas projects in the U.S. In 2020, the daily net production of Eagle Ford project and Rockies project reached 48,000 BOE and 9,000 BOE, respectively.
The company owns interests in two important deepwater projects, namely Stampede and Appomattox in the U.S. Gulf of Mexico. In 2020, with the improvement of surface facilities and oilfield water injection, the production of Stampede project remained stable. The company and its partners reduced the number of production wells in the Appomattox project with a daily net production of approximately 14,000 BOE. In addition, the company owns interests in several other exploration blocks in the U.S. Gulf of Mexico.
Canada
The company owns 100% working interest in Long Lake and three other oil sands projects in the Athabasca region of northeastern Alberta in Canada.
The company holds a 7.23% interest in the Syncrude project and its daily net production in 2020 was approximately 20,000 BOE. The company also holds a 25% interest in the Hangingstone oil sands project and non-operator interests under several other exploration and development licences.
The company also holds 100% exploration interest in two exploration blocks in offshore East Canada. The drilling of one wildcat is expected to be completed in 2021.
In addition, the company holds approximately 9.47% of shares in MEG Energy Corporation, a listed company in Canada.
Other Regions in North America
The company owns a 12.5% interest in the 2C block and a 17.12% interest in the 3A block in Trinidad and Tobago, respectively, of which the 2C block is in production.
The company also owns 100% exploration operator interest in block 1 and a 70% exploration operator interest in block 4 of the Cinturon Plegado Perdido deepwater exploration blocks in Mexico, respectively. In 2020, the drilling of one wildcat in block 1 was completed and the drilling of one wildcat in block 4 is scheduled to be completed in 2021.
South America
South America is one of the company’s important sources of future reserve and production growth. The company holds interests in oil and gas blocks in Brazil, Guyana and Colombia in South America, as well as a 50% interest in BC ENERGY INVESTMENTS CORP. (BC) in Argentina. As of December 31, 2020, the company’s reserves and production derived from South America reached 286.6 million BOE and 72,018 BOE/day, respectively, representing approximately 5.3% of the company’s total reserves and approximately 5.0% of its production.
Brazil
The company holds a 10% interest in Libra PSC, a deepwater pre-salt project in Brazil. The oilfield is located in the Santos Basin. In addition, the company holds a 5% interest in Búzios Surplus project in Brazil, which is a deepwater pre-salt project.
The Mero oilfield in the northwest area of the Libra block includes four production units, namely Mero 1, Mero 2, Mero 3 and Mero 4. The production of the extended well trial project remained stable in 2020. The final investment decisions for Mero 1, Mero 2 and Mero 3 oilfields have been made; and the projects are expected to commence production in 2021, 2023 and 2024, respectively. The development plan of Mero 4 has been completed.
The company also holds 100% interest in the 592 block in offshore Brazil, a 20% interest in the ACF Oeste block, and a 30% interest in the Pau Brasil block.
Guyana
The company holds a 25% interest in the Stabroek block in offshore Guyana.
The Phase I of Liza oilfield in the block commenced production ahead of schedule in December 2019. Its daily net production reached approximately 17,000 BOE in the year ended December 31, 2020.
The final investment decision for Liza oilfield Phase II has been made and the oilfield is expected to commence production in 2022.
In 2020, 3 new discoveries, including Uaru, Yellowtail-2 and Redtail had been made in the Stabroek block, and Yellowtail oil and gas bearing structure was successfully appraised. A total of 18 new discoveries have been made in the block and the recoverable resources have been further expanded to approximately 9.0 billion BOE.
Argentina
The company holds a 50% interest in BC and makes joint decisions on its management. BC holds a 50% interest in Pan American Energy Group in Argentina.
Other Regions in South America
The company also holds interests in several exploration and production blocks in Colombia.
Europe
In Europe, the company holds interests in oil and gas fields, such as Buzzard and Golden Eagle in the U.K. North Sea, and holds a 10% equity interest in Arctic LNG 2 LLC in Russia. As of December 31, 2020, the company’s reserves and production derived from Europe reached 72.0 million BOE and 54,518 BOE/day, respectively, representing approximately 1.3% of the company’s total reserves and approximately 3.8% of its production.
The U.K.
The U.K. is one of the company’s key overseas development areas. The company’s asset portfolio in the U.K. North Sea includes projects under production, development and exploration, which mainly include holding a 43.21% interest in the Buzzard oilfield, one of the largest oilfields in the North Sea; and a 36.5% interest in the Golden Eagle oilfield.
In 2020, the Buzzard oilfield’s daily net production reached approximately 38,000 BOE. In addition, Buzzard oilfield Phase II is expected to commence production in 2021.
The company also holds 50% exploration interest of P2215 block and 100% exploration interest of P2279 block in the U.K. North Sea, and plans to complete the drilling of two appraisal wells in Glengorm before 2022.
In addition, the company holds 30% interest in P2415 block in the U.K. West Shetland Basin.
Russia
The company owns a 10% interest in Arctic LNG 2 LLC, which is located in the Gydan Peninsula in the Arctic region of Russia. The project is the second oil and gas cooperation project between China and Russia in the Arctic Circle, which covers the whole industry chain. Three LNG production trains will be established as planned in the project and put into production in 2023, 2024 and 2026, respectively. It is expected to produce 19.80 million tons of LNG annually after full operation.
Sales and Marketing
Sales of Crude Oil
The company sells crude oil produced in offshore China in domestic market mainly through CNOOC China Limited, its wholly-owned subsidiary. The company sells crude oil produced overseas in international and domestic markets mainly through China Offshore Oil (Singapore) International Pte Ltd, its wholly-owned subsidiary; and CNOOC Marketing Canada and CNOOC Marketing U.S.A. Inc under CNOOC International Limited, another wholly-owned subsidiary.
The company sells three types of crude oil in China, i.e., heavy crude oil, medium crude oil and light crude oil. Its major customers in China are CNOOC, CNPC, China Petrochemical Corporation, and some local private refineries.
Sales of Natural Gas
The company’s natural gas customers are primarily located in the southeast coastal areas of China, and the major customers include CNOOC Gas and Power Group, China BlueChemical Ltd, Hong Kong Castle Peak Power Company Limited, etc.
Sales of LNG from the NWS Project in Australia and the Tangguh LNG Project in Indonesia are mainly based on long-term supply contracts to various customers in the Asia-Pacific region, including the Dapeng LNG Terminal in Guangdong Province and the LNG terminal in Putian, Fujian Province in China.
Business Strategy
The principal components of the company’s strategy are to focus on reserve and production growth, and develop natural gas business.
Regulation
The company is required to obtain various governmental approvals, including (but not limited to) those from the Ministry of Natural Resources, the Ministry of Ecology and Environment, the National Development and Reform Commission, the Ministry of Transport, and the Ministry of Emergency Management before it is permitted to conduct production activities.
The company’s sales are coordinated by the National Development and Reform Commission. For independent operations and joint exploration and production with foreign enterprises, the company is required to obtain various governmental approvals, through CNOOC, including permits for exploration blocks, approval of a reserve report, environmental impact reports submitted through CNOOC, extraction permits, and work safety permits. Moreover, for joint exploration and production, the company is required, through CNOOC, to file overall development plan with the National Development and Reform Commission, and to report the circumstances and situation of the PSCs or other cooperation contracts between CNOOC and the foreign enterprises to the Ministry of Commerce.
Environmental Regulation
The company’s operations are required to comply with various applicable environmental laws and regulations, including PRC laws and regulations administered by the Ministry of Ecology and Environment, and national and local environmental protection agencies for its operations in China.
Competition
The company’s principal competitors in the PRC are PetroChina Company Limited and Sinopec.
History
CNOOC Limited was incorporated in 1999 in Hong Kong under the Chapter 32 of the Laws of Hong Kong, the predecessor to Chapter 622 of the Laws of Hong Kong.
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