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CNOOC to raise $11.7b in debt financing

(Agencies)
Updated: 2009-03-19 16:28

A CNOOC booth at a petrochemical exhibition in Shanghai, May 23, 2007 [Asianewsphoto]

China National Offshore Oil Corp (CNOOC) aims to raise as much as 80 billion yuan ($11.71 billion) to finance aggressive expansion plans this year, a senior executive said on Thursday.

Related readings:  CNOOC to invest 300b yuan in Guangdong  CNOOC refinery to start operation later this month  Energy: CNOOC builds chemical complex in Hainan  Oil firms expect more profits in 2009

The move comes as the company faces niggling cash flow problems and plummeting revenues following the collapse in world crude prices.

"We are currently preparing to issue mid-term notes. We have already submitted the application and we will make an announcement once we hear the result," Wu Mengfei, the company's chief financial officer, told reporters on the sidelines of an industry conference.

The debt financing will be carried out over several stages, he said, without providing further detail.

He said the move would help the company -- the State-owned parent of Hong Kong-listed CNOOC Ltd -- take advantage of falling steel and raw material costs and raise the pace of construction on a number of exploration projects along the Chinese coast.

Fu Chengyu, CNOOC's chairman, revealed on the sidelines of the recent meeting of the National People's Congress that the company would invest a total of $16.5 billion this year, 26 percent higher than in 2008.

Wu said that the company was currently looking into the possibility of expanding its 12 million-ton refining joint venture with Shell in Huizhou in southeastern China's Guangdong province, the first phase of which is scheduled to go into full operation later this year.

CNOOC is also looking at other potential refining projects across the country, and continues to eye a number of overseas acquisition targets, Wu said.

"The world economy (in its weakened state) will produce a great deal of opportunities," he said.

"We will make our own preparations. After our attempt to acquire Unocal (in 2005) everyone knows CNOOC, and knows that CNOOC is a good buyer. We receive letters every day from people trying to sell something to us. We have a special team currently conducting research into the opportunities."

Wu said that CNOOC has emerged from the world financial crisis relatively unscathed, but it was still struggling under the impact of last year's rapid drop in the global price of oil.

"The oil price cut has had a bigger impact. Compared with last year, our cash profits are much lower. We are facing shrinking oil revenues and cash flow problems, but our financing ability remains very strong."

"With oil prices at $40 a barrel, we can still make a profit," he said.