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China’s largest offshore oil producer, CNOOC, has set its 2018 capital expenditure plan at the highest level since 2014, signaling that it has started to recover from the oil price crash thanks to the steady rise in oil prices in recent months.
CNOOC said on Thursday that it had budgeted total its capex between US$11.1 billion and US$12.7 billion (70 billion to 80 billion yuan) for 2018, which is higher than the US$7.9 billion (50 billion yuan) spent last year, and the US$7.8 billion (49 billion yuan) spent in 2016.
A total of 51 percent of the capex in 2018 will go to domestic projects, while the remaining 49 percent is earmarked for overseas developments.
CNOOC also raised its production target for this year, to between 470 million and 480 million barrels of oil equivalent (boe), which, if achieved, would be the first production growth in three years.
Last year, CNOOC expects to have produced 469 million boe.
For 2019 and 2020, the company targets production of around 485 million boe and 500 million boe, respectively.
CNOOC expects to drill 132 wells this year, up from 126 wells drilled in 2017. It is also boosting seismic data acquisition in 2018.
This year, the Chinese company expects five projects in which it holds working interests to come on stream, including the Stampede oil field in the Gulf of Mexico, in which CNOOC has 25 percent and Hess is the operator.
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The Chinese firm’s strategy for this year also includes investing in more resources in exploration and boosting exploration activities to support sustainable mid- to long-term growth. CNOOC will focus on its core areas overseas—the Gulf of Mexico, Canada, Guyana, Brazil, UK, Ireland, Nigeria, and Senegal.
Overseas projects may help CNOOC to boost its production by nearly 20 percent to 562 million boe by 2021, Bloomberg quoted Neil Beveridge, a senior analyst at Sanford C. Bernstein & Co, as saying in a research note last week.
“If CNOOC can deliver on growth projects, the company will transform into a truly global Chinese E&P for the first time,” Beveridge wrote.
By Tsvetana Paraskova for Oilprice.com
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Tsvetana is a writer for Oilprice.com with over a decade of experience writing for news outlets such as iNVEZZ and SeeNews.