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Chinese Oil Major Eyes Significant Output Boost

China’s offshore oil major CNOOC plans to increase its production by 12% over the next two years, to between 730 and 740 million barrels of oil equivalent.

For context, this year CNOOC expects production of between 650 million and 660 million barrels of oil equivalent, Upstream reported.

The news comes on the heels of CNOOC’s latest financial report, which showed the company had doubled its net profit in 2022, boasting an average realized price for its oil of $96.59 per barrel. This was 42.3% higher than the average realized price for the previous year.

CNOOC was not the only Chinese energy major that reported strong financial results for 2022. Like Western Big Oil majors, the Chinese majors also did well in last year’s higher oil price environment. The combined profits of CNOOC, CNPC, and Sinopec came in at close to $52 billion, which was a record high, Chinese media reported.

At the same time, domestic production for all three also increased last year, with Sinopec reporting a record in both oil and gas output, and CNPC doing the same.

The Chinese government has been actively encouraging the energy industry to increase local production of both crude oil and natural gas in order to reduce the country’s overwhelming dependence on imports.

Meanwhile, Saudi Arabia closed two investment deals with Chinese refiners, and CNOOC completed the first purchase of LNG settled in yuan rather than dollars or euros.

The first piece of news shows Saudi Arabia’s firm commitment to China as a supplier of oil and partner in refining it into fuels and chemicals. At the same time as that story became public, the news also broke that the Saudis would also be investing in a $10-billion new refinery in China.

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The second piece of news will likely add fuel to talk about the de-dollarization of global energy trade, not only in oil but in LNG as well, as China seeks to make its currency more widely used internationally.

By Charles Kennedy for Oilprice.com

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