CNOOC Signs Agreements with Nine International Oil Companies
China's National Offshore Oil Corporation (CNOOC) has signed Strategic Cooperation Agreements with nine international oil companies including Chevron, ConocoPhillips, Equinor, Husky, KUFPEC, Roc Oil, Shell, SK Innovation and TOTAL. The move comes as the nation celebrates 40 years since its opening-up.
The agreements facilitate oil and gas developments in two areas in the Pearl River Mouth Basin offshore China. Area A is approximately 15,300 square kilometers, with a water depth of 80-120 meters and only open for the deep layers below Enping Formation of Paleogene. Area B is approximately 48,700 square kilometers, with a water depth of 500-3,000 meters and open for all the layers.
CNOOC has signed more than 200 PSCs since its inception in the early 1980s, even as it has increasingly relied on its own resources to tap deep-water projects in Chinese waters — most recently the giant Lingshui 17-2 gas field in the South China Sea.
Wood Mackenzie's research director Andrew Harwood, said: "The two Strategic Cooperation areas are understood to be prospective for ultra-deepwater, high pressure/high temperature, or low porosity/low permeability reservoirs.”
The international oil companies all have existing E&P operations in the country, and the agreements further demonstrate their commitment to involvement in China's energy sector. Should these Strategic Cooperation Agreements progress into full exploration contracts, CNOOC will retain operatorship.
CNOOC has set its sights on raising gas reserves by 50 percent by 2025 and developing further its deepwater expertise, says Harwood, and these agreements will help the company achieve its targets and hone its technical skillset. The company has promised to increase spending and raise output to enhance the nation's energy security. It has already entered into over 220 oil contracts with 81 international oil companies from 21 countries and regions in the past 40 years. These international agreements have significantly boosted China's offshore oil exploration and development.
"Globally, Wood Mackenzie expects exploration budgets to remain steady in 2019. But with stronger prices, lower costs and a greater focus on commerciality, the exploration sector is now more resilient than ever, and is well positioned to generate positive full-cycle returns at oil prices of $50/barrel or even lower."
This week, China's President Xi Jinping attended a celebration for the 40th anniversary of the country’s reform and opening-up in Beijing saying: “The practice of reform and opening-up over the past 40 years has shown that openness brings progress, while seclusion leads to backwardness.”
Over the past 40 years, China has recorded an average annual GDP growth rate of around 9.5 percent. This contributed over 30 percent to global economic growth and lifted more than 740 million people out of poverty, Xi said.
He pledged to promote more openness amid ongoing economic globalization and wants to focus on jointly building the Belt and Road with other nations.