China's state-controlled offshore producer CNOOC has increased its investment budget for this year in line with hopes for an economy recovery and a government push to raise domestic upstream output.
CNOOC has set its capital expenditure (capex) budget at 90bn-100bn yuan ($13.9bn-15.5bn) for 2021, up by 13.2-25.8pc from an estimated Yn79.5bn last year. The budget is based on an oil price assumption of $50/bl for Brent crude, CNOOC's chief financial officer Xie Weizhi said at company's annual strategy review.
The company will increase investment in China, with about 72pc of the capex targeted at the domestic market, compared with 62pc in last year's original plan. CNOOC scaled back its output and spending targets after oil prices collapsed in late March last year, cutting capex to Yn75bn-85bn from Yn85bn-95bn previously, with most of the cuts at its overseas projects.
CNOOC has set a production target of 1.49mn-1.52mn b/d of oil equivalent (boe/d) for 2021, with Chinese production accounting for around 68pc of this. The output target is up by 3.5-5.6pc from record high production of 1.44mn boe/d last year. Liquids will account for about 80pc of this year's targeted output.
The company plans to bring on line 19 new offshore projects in 2021, including 17 in China. Its key projects are the Lingshui 17-2 gas field and the Liuhua 21-2 field in the South China Sea. The schedule includes just two overseas projects — the first phase of the Mero field in Brazil and a second phase at Buzzard in the UK, in which CNOOC owns stakes of 10pc and 43.2pc respectively.
Gas targets
CNOOC has laid out an ambitious plan to raise gas output as a part of its low-carbon strategy, aiming for gas to account for 30pc of its total output by 2025 from around 21pc in 2020.
"CNOOC will focus more efforts on gas field exploration in China and also explore opportunities in onshore tight gas and shale gas in China after merging with coal-bed methane producer CUCBM in 2019," said chief executive Xu Keqiang.
The company set up a special team to look into renewable energy strategy and innovation last year, Xu said. It plans to invest around 5pc of its annual capex in the new energy sector, mostly focused on offshore wind farm development and innovation, where it is more competitive.
CNOOC has received a permit for its second offshore wind turbine farm, a 1,000MW project in south China's Guangdong province. It started a 300MW offshore wind turbine farm in Jiangsu province last year.
The strategy and capex targets were announced by CNOOC's listed arm and do not cover its downstream operations, including refineries and LNG terminals in China.
| CNOOC operating results | |||||
| Capex (bn yuan) | Domestic output | Overseas output | |||
| Crude* (b/d) | Gas (mn ft³/d) | Crude* (b/d) | Gas (mn ft³/d) | ||
| 2013 | 89.4 | 610,435 | 634.5 | 279,409 | 482.7 |
| 2014 | 105.7 | 626,791 | 643.3 | 305,345 | 546.6 |
| 2015 | 65.9 | 761,019 | 731.9 | 338,440 | 482.1 |
| 2016 | 48.7 | 739,378 | 648.7 | 321,131 | 472.5 |
| 2017 | 49.7 | 706,955 | 721.4 | 335,887 | 432.8 |
| 2018 | 62.1 | 705,366 | 834.8 | 317,224 | 453.9 |
| 2019 | 78.6 | 726,866 | 987.9 | 368,886 | 388.7 |
| 2020e | 79.5 | 765,700 | 1,136.1 | 362,400 | 557.3 |
| 2021** | 90-100 | ||||
| 2020 estimated output based on 3Q results | |||||
| *Includes crude and liquids | |||||
| **Company outlook | |||||
| Source: Company filings | |||||
