LNG

China National Offshore Oil Company (CNOOC), a leading LNG market participant among Chinese oil and gas majors, has outlined its 2023 strategy with higher spending plans, including the targeting of more natural gas, both offshore and in unconventional onshore developments.

CNOOC said the offshore focus in China was on the South China Sea, including development of the Shenhai-1 gas field to promote efficient exploration and development of adjacent gas discoveries.

“We will also focus on five key projects including multi-stratal exploration around the Baodao 21-1 gas field and the rolling exploration around the Yinggehai gas field,” explained CNOOC.

Around the existing offshore Bohai gas fields, Chinese largest in the northeast, it would concentrate on the Bozhong 19-6 area and the Bozhong Depression.

CNOOC added that it was also pursuing an onshore unconventional natural gas programme to target 100 billion cubic metres of resources.

“We will actively promote the integration of exploration and development to increase resources in the Shenfu area,” explained CNOOC, referring to the onshore oil and gas located in the Shaanxi province of northwest China.

Spending

CNOOC’s net production target is between 650 million and 660M barrels of oil equivalent of which production from China will account for 70 percent and overseas resources would provide 30 percent.

Net production is also forecast to reach 690M to 700M Boe in 2024 and 730M to 740M BOE in 2025.

The company’s total capital expenditure for 2023 is budgeted at between 100 billion Chinese yuan ($14.75Bln) and 110Bln yuan ($16.23Bln), of which, capital expenditures for exploration, development, production will account for 18 percent, 59 percent and 21 percent respectively and 2 percent will go on administration.

Analysts said the robust programme suggested continued expansion of the economy in China through 2023 after the Covid-19 restrictions were lifted.

Nine new projects are planned to be brought on stream in 2023, including the Bozhong 19-6 gas field Phase I development in China and two oil fields at Lufeng 12-3 and Enping 18-6.

Overseas projects coming on stream include three developments in South America, the Payara Project in Guyana and the Buzios 5 and Mero 2 projects in Brazil.

The company said it continued to promote greener, lower-carbon developments and is expanding renewables, including its offshore wind project in Hainan, providing an additional 500 million kilowatt hours per annum to the power grid.

For shareholders, CNOOC said it expected to continue its annual dividend pay-out to investors through 2024 of “no less than” Hong Kong dollars $0.70 (US$0.09).

“In the coming year, CNOOC will continue to seek progress while delivering a stable performance,” said Chief Executive Zhou Xinhuai.

“The company will vigorously implement the three major programs of reserves and production augmentation, technological innovation and the green energy transition,” added Zhou.

China Petroleum and Chemical Corp. (Sinopec) said it had completed the development of the first phase of the new Weirong shale-gas field in the southwest Sichuan province with an annual production capacity of 1 billion cubic metres of natural gas.

PetroChina, the Hong Kong-listed arm of China National Petroleum Corp. (CNPC), reported a drop of just over 23 percent in nine-month net profits to 37.25 billion yuan ($5.28 billion) due to a lower oil price and intensified competition in refining as it also faced revenue problems with LNG and pipeline gas imports.

China National Petroleum Corp., the largest Chinese oil and gas company, said it planned to ramp up production of domestic natural gas to meet more than 50 percent of its primary energy output by 2020 to support the clean-air policies that have also boosted the need for LNG and pipeline imports.

“Domestic natural gas output is expected to reach 55 percent of domestic output by 2025,” said a CNPC statement.

The company, whose Hong Kong-listed subsidiary is PetroChina, said its natural gas production reached 138.02 billion cubic metres last year, of which 109.37 Bcm was produced in China, a year-on-year increase of 5.9 percent.

CNPC said it had also increased imports of overseas pipeline natural gas and LNG, while striving to further improve its own production capacity in the coming years.

The National Development and Reform Commission in May 2019 released new oil and gas liberalization measures to require facility operators to open up access to their oil and gas infrastructure to free up the flow of natural gas.

The new measures follow the government's announcement earlier in 2019 that it plans to establish a national pipeline company as part of China’s move to accelerate the opening up of its domestic oil and gas markets and to extend the gas network to provide a nationwide alternative to coal.

These measures are all part of the clean-air policy that will strive to replace coal use with natural gas in the domestic market.

This energy reform comes as the start of Russian supplies from the “Power of Siberia” natural gas pipeline is scheduled to start in December 2019.

CNPC and Russian company Gazprom have signed a 30-year agreement for Russian gas to be supplied via the eastern route, the “Power of Siberia” gas pipeline, and would amount in volumes of 38 Bcm per annum.

CNPC's pipeline contract with Gazprom is in addition to its stake in the latest Russian LNG export project, the Yamal plant on the Arctic coast of Siberia. Yamal is operated by the second-largest Russian natural gas company, Novatek.

The “Power of Siberia” pipeline is around 97 percent complete with more than 2,000 kilometres now installed and connected in the section running from Chayandinskoye, the gas fields centre in the Russian Far East, to the Chinese border in the Amur Region.

CNPC also said that its shale-gas production in the southwest province of Sichuan reached 4.27 Bcm in 2018, up 40 percent compared with the previous year and it will be further developed for purposes of national energy security.

The daily shale-gas output in southern Sichuan has reached 20.11 million cubic metres, a year-on-year increase of 119.3 percent.

The CNPC statement cited CNPC Chairman Wang Yilin as also saying the emissions from energy output and use had declined.

He said emissions of ammonia nitrogen, sulfur dioxide and nitrogen oxides decreased by 7 percent, 7.6 percent and 7.2 percent respectively year-on-year in 2018.

The company said it would invest another 31.9 billion yuan ($4.6 billion) in the 2019-2020 period to strengthen pollution prevention and boost the nation’s transformation to lower carbon emissions.