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CNOOC, China’s largest offshore oil producer, plans its capital expenditure for 2019 to be the highest since 2014 and to increase drilling and development of resources at home after President Xi Jinping ordered companies to boost domestic production.
CNOOC said on Wednesday that it has budgeted total capital expenditure at US$10.3 billion-US$11.8 billion (70 billion to 80 billion Chinese yuan) for 2019. Exploration, development, and production capex is set at around 20 percent, 59 percent, and 19 percent, respectively, of the total, the company noted.
The capex plan for 2019 is the highest in five years and compares to an expected US$9.3 billion (63 billion yuan) in capital spending for 2018.
CNOOC will focus on exploring large to medium-sized oil fields and to boost exploration of natural gas, Reuters quoted a company presentation as saying.
Spending on exploration and production in China will account for 62 percent of total spending this year, compared with 51 percent capex on domestic resource development and production for 2018.
Last week, CNOOC said that it looks to double the number of its exploration projects and proven oil and gas reserves by 2025.
Some of the other big energy producers in China are tapping more tight oil and gas wells, aiming to increase domestic oil and natural gas production at the world’s largest crude oil importer and what will soon be the world’s top natural gas importer.
As part of a government push to boost domestic energy supply, China National Petroleum Corporation (CNPC) and Sinopec are raising investments to increase local oil and gas production and are accelerating drilling at tight oil and gas formations in western China.
Oil demand continues to grow in China, while domestic production has been declining in recent years. This has led to additional—and costly—imports, making China the world’s largest crude oil importer. For natural gas, a similar trend is apparent. A government drive to have millions of residents switch to natural gas from coal has resulted in China surpassing South Korea in 2017 to become the world’s second-largest liquefied natural gas (LNG) importer behind Japan.
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.