Chinese Oil Giant CNOOC Lifts Capex To Record High

China's state-held oil and gas giant CNOOC Ltd raised its capital expenditure budget for this year to a record high to support growth in its reserves and production, the company said in its quarterly report on Tuesday.

CNOOC raised its net oil and gas production in the third quarter and in the nine months of 2023, thanks to growing domestic output and production increases at projects offshore Guyana and Brazil, where CNOOC is a minority shareholder.

CNOOC's revenues for the third quarter rose by 5.5% year-on-year, but the net income slid by 8.13% to $4.6 billion (33.88 billion Chinese yuan) amid lower oil and natural gas prices.

The average realized oil price for the company was $83.20 per barrel, down by 13.2% compared to the third quarter of 2022, when international oil and gas prices were soaring amid the energy crisis and the Russian invasion of Ukraine.  

For the first nine months of 2023, CNOOC's average realized oil price was 24.2% lower year-on-year, down to $76.84 a barrel from $101.40 a barrel in January-September 2022.

Earlier this year, CNOOC reported an 11.3% decline in its net profit for the first half of 2023, too, as lower oil prices weighed on profitability.

CNOOC's capex jumped by 30.2% year-over-year in the first nine months of 2023-to $12.2 billion (89.46 billion yuan), thanks to projects under construction. In the third quarter alone, capex rose by 21.5% to $4.5 billion (32.947 billon yuan).

CNOOC raised its full-year capex budget to a record-high range between $16.4 billion (120 billion yuan) and $17.8 billion (130 billion yuan) "to support reserves and production growth," the Chinese giant said.

"The higher capex does not reflect higher cost, but rather due to acceleration in building new production capacities," CNOOC's chief financial officer Wang Xin said in an earnings call, as carried by Reuters.

By Tsvetana Paraskova for Oilprice.com

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