Central SOE plans big investment to have more wells come on stream, boost production

China National Offshore Oil Corp, the country's top offshore oil and gas driller, plans to ramp up exploration investment this year with a batch of oil and gas fields coming on stream.

The company's planned capital expenditure for 2022 will be between 90 billion yuan ($14.14 billion) and 100 billion yuan, with that for exploration, development, production and others to account for approximately 20 percent, 57 percent, 21 percent and 2 percent, respectively, according to a summary of the centrally administered State-owned enterprise's business strategy and development plan for 2022 released on Tuesday.

In 2022, 13 new oil and gas fields projects are expected to come on stream, while it also plans to drill 227 offshore exploration wells and 132 onshore unconventional exploration wells.

The company's domestic exploration strategy will focus more on the gas sector while it will also push forward the development of unconventional gas exploration, said Xie Weizhi, chief financial officer of CNOOC Ltd.

As the three major oil and gas companies are shifting focus from fossil fuel energy to new energy given the backdrop of China's goals to peak carbon emissions by 2030 and achieve carbon neutrality by 2060, the company will also invest 5 percent to 10 percent of its total capital expenditure in the development of new energy, Xie said.

Xu Keqiang, CEO of CNOOC Ltd, said the company's domestic crude output is expected to reach a peak of 60 million metric tons by 2030 and then remain at a steady level－five years ahead of the country's expected crude consumption peak.

The company's domestic natural gas output is seen reaching a peak of 40 billion cubic meters by 2035, Xu said.

The company's unconventional natural gas output has witnessed a drastic increase with annual production exceeding 3.5 billion cubic meters. Unconventional gas output is expected to reach 6 billion cubic meters to 8 billion cubic meters by 2025 and remain steady, he added.

"In 2022, we will continue to give priority to profit generation, strive to increase oil and gas reserves and production, and promote green energy transition initiatives," Xu said.

Steadily growing oil and natural gas output is critical to ensure the country's energy security as gas demand surges, experts said.

Li Ziyue, an analyst with BloombergNEF, said CNOOC's oil and gas production is estimated to grow above 6 percent annually during 2022-24, and "the company's continuous upstream investment and production commitment will play a critical role in China's energy supply security".

CNOOC's targeted net production for 2022 is 600 million barrels of oil equivalent to 610 million BOE, with production from China and overseas accounting for approximately 69 percent and 31 percent, respectively.

Its net production for 2021 is expected to be approximately 570 million BOE. The company's net production for 2023 and 2024 is estimated to hit 640 million BOE to 650 million BOE, and 680 million BOE to 690 million BOE, respectively.