CNOOC, the Chinese state energy giant focused on offshore and overseas exploration and production, reported a 27-percent drop in revenues for the third quarter, as quoted by Reuters, as business got pressured by low oil prices.
Production of oil increased during the reporting period, but the price war started by Saudi Arabia in early spring, and the effects of the coronavirus pandemic on oil demand had a severe effect on sales.
The realized oil prices of CNOOC averaged $43.03 a barrel during the third quarter, the company said in a regulatory filing, while production rose by 29 percent to 131.2 million barrels of oil equivalent in the period. Domestic production, in particular, grew by a sizeable 10.4 percent. This, however, did not help revenues.
While it boosted domestic production following a government call to all state oil majors to increase China’s self-reliance on oil, CNOOC curbed production overseas in response to market conditions. Production from assets abroad fell by 4.6 percent during the third quarter.
Earlier this year, when the pandemic started to affect oil prices, CNOOC, like all other oil companies, announced spending cuts and said it would pick its investments more carefully in the new price environment.
“As the coronavirus outbreak increases uncertainties in global economy and oil prices fall sharply ... the company will implement more stringent cost controls and more prudent investment decisions,” CNOOC said, as quoted by Reuters, in late March.
Despite its efforts to boost local production, China has remained dependent on imports for most of the oil it consumes. This has made it the number-one factor for the oil price recovery since April. While OPEC+ curbs on production went some way towards calming traders down, it was China’s rising imports that drove the improvement, as buyers stocked up on cheap oil while it lasted.
By Charles Kennedy for Oilprice.com
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Charles is a writer for Oilprice.com