Chinese Oil Giant Suffers As U.S. Sanctions Sting

China National Offshore Oil and Gas Company (CNOOC), the biggest Chinese offshore producer with operations both in China and abroad, will see an impact on its oil and gas shipping business, due to the U.S. sanctions on several Chinese tanker owning firms, a senior CNOOC executive said on Thursday.

At the end of September, the U.S. imposed sanctions on several Chinese tanker owners for shipping Iranian oil, including units of Cosco, who owns more than 40 oil tankers, including 26 supertankers, or the so called very large crude carriers (VLCCs).  

“We are imposing sanctions on certain Chinese firms for knowingly engaging in a significant transaction for the transport of oil from Iran, including knowledge of sanctionable conduct, contrary to U.S. sanctions,” U.S. Secretary of State Mike Pompeo said on September 25, while the Department of the Treasury’s Office of Foreign Assets Control (OFAC) published a list of companies which are now sanctioned for knowingly dealing with Iranian oil.

Those sanctions will impact CNOOC’s business of shipping oil and gas from overseas fields to China, Xie Weizhi, chief financial officer at CNOOC’s listed unit CNOOC Limited said at a news briefing, as carried by Reuters.

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CNOOC is said to be looking to charter liquefied natural gas (LNG) tankers to replace previously hired vessels linked to a sanctioned Chinese company, Reuters reported earlier this month, quoting several industry sources.  

The sanctions are not expected to affect CNOOC’s oil and gas production volumes, because “COSCO is just a transportation company,” CNOOC’s manager said today.   

CNOOC reported on Thursday a total net production of 124.8 million barrels of oil equivalent (boe) for the third quarter of 2019, up by 9.7 percent on the year. Production from offshore China rose by 8.9 percent thanks to new project start-ups, while overseas production jumped by 11.2 percent, mainly due to the contribution from the new projects Egina offshore Nigeria and Appomattox in the U.S. Gulf of Mexico.

By Tsvetana Paraskova for Oilprice.com

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