Industry News

China Oilfield Services Limited recently succeeded in the first offshore beta operation of its self-developed logging while drilling ("LWD") equipment Drilog®, following many onshore beta operations for the new equipment.

LWD is a high-end technology that allows operators to grasp real-time positions and logging geo-data, significantly improving accuracy and saving time in drilling operations. The Drilog® system is a LWD technology self-developed by COSL with full intellectual property. The system can be plug onto its self-developed rotary steering system the Welleader® to perform geo-steering functions.

COSL has developed and produced 6 Drilog® system engineering sample units, which have received valid approvals for all designed functions and performance indicators.

On October 13, CNOOC Limited announced that its Enping 24-2 oilfield has commenced production.

Enping 24-2 oilfield is located in the Pearl River Mouth Basin of the South China Sea with an average water depth of approximately 86~96 meters. The main production facilities include one drilling and production platform, one floating production storage and offloading unit (FPSO) and 17 producing wells. Currently there are 2 wells producing approximately 8,000 barrels of crude oil per day, and the project is expected to reach its peak production of approximately 40,000 barrels per day in 2017.

Enping 24-2 is an independent oilfield which the company holds 100% interest and acts as the operator.

On August 28, CNOOC Limited announced its interim results for the six months ended June 30, 2014.

For the first half of the year, the company's total net oil and gas production reached 211.6 million barrels of oil equivalent (BOE), up 6.8% year-on-year (yoy), with 36.3 million BOE contributed by Nexen.

The company's average realized oil price was US$106.30 per barrel in the first half of 2014, representing an increase of 2.0% yoy, while average realized gas price rose 13.5% yoy to US$6.44 per thousand cubic feet.

Benefited from the growth of net oil and gas production and increase in realized oil and gas prices, the company recorded RMB117.1 billion in oil and gas sales revenue, a yoy increase of 5.7%; meanwhile, net profit fell 2.3% yoy to RMB33.59 billion.

In the first half of 2014, the company's all-in cost was US$43.20 per BOE, up slightly by 2.0 % yoy, while operating cost was US$11.78 per BOE, up 7.0 % yoy, mainly attributable to the consolidation of two more months of Nexen's performance.

In the area of exploration, the company made 9 new discoveries and 23 successful appraisal wells. Among them, Lingshui 17-2, discovered by "Hai Yang Shi You 981", was successfully tested and is expected to become the first large-sized deepwater gas field made by our independent exploration activities. While Lvda 16-3 South structure is expected to become a mid-sized discovery after appraisal, Kenli 16-1 structure uncovers the good exploration potential of southern slope of Laizhou Bay Sag in Bohai. Kenli 3-2 oilfields, Panyu10-2/5/8 project and Wenchang 13-6 oilfield have commenced production within the year as scheduled while other projects are progressing accordingly.

During the period, the company continued to advance the integration of Nexen, especially in the areas of management, resources development and corporate culture. Nexen's safety and environmental protection achieved best performance in its history in the first half of 2014. Production efficiency of Buzzard oilfield in the UK North Sea was further enhanced, while production and operation of Long Lake oil sands project achieved significant improvement. The progress of integration reached the company's expectation.

Mr. Wang Yilin, Chairman of the company, said, "In the first half of 2014, the company has executed its 'New Leap Forward' strategy in a solid way and achieved satisfactory results. We will endeavor to strengthen our management, enhance the growth quality and efficiency of the company to create greater value for our shareholders."

Mr. Li Fanrong, CEO of the company commented, "During the first half of 2014, we have actively pushed ahead different areas of our business. Good progress was made in the production and operation and a healthy financial position was maintained. In the second half of the year, we will continue to work diligently to ensure that we meet our annual production and business targets."

In the first half of the year, the company's basic earnings per share reached RMB0.75. The Board has declared an interim dividend of HK$0.25 per share (tax inclusive).

On June 17th, China National Offshore Oil Corporation (CNOOC) and BP signed an agreement regarding long-term LNG sale and purchase at London, UK. Under the witness of Chinese Premier Li Keqiang and British Prime Minister David Cameron, Mr. Wang Yilin, Chairman of CNOOC, and Mr. Dev Sanyal, EVP of BP, signed the agreement.

According to the Heads of Agreement signed by the parties, BP is to supply up to 1.5 million tones per annum (mtpa) of LNG from its global portfolio to CNOOC over 20 years starting in 2019. The parties expect to reach a full commercial contract in mid-2014. 

Mr. Wang Yilin, Chairman of CNOOC, said: "The agreement with BP will not only deepen the cooperation between both parties, but also further diversify the LNG supply of CNOOC. CNOOC will continuously strive to acquire competitive natural gas resources around the world, and to make positive contribution to securing clean energy supply as well as protecting ecological environment of China."

Ever since year 2001, CNOOC and BP have built sound relationship throughout the LNG value chain. The execution of this agreement sets a new milestone in the cooperation between the parties.

As the pioneering enterprise of China's LNG industry, CNOOC imported more than 13 million tones of LNG, accounting for 72% of China's total LNG importation, in year 2013. By the end of May 2014, CNOOC has built and put 6 LNG receiving terminals into operation at Guangdong, Fujian, Shanghai, Zhejiang and Tianjin, with a total LNG receiving capacity of 24.8 mtpa. Meanwhile, the Hainan, Shenzhen, Yuedong LNG receiving terminals are currently under construction and will be commissioned before the end of 2015.

On June 17th, China National Offshore Oil Corporation (CNOOC) and Shell announced that they have signed a Global Strategic Alliance Agreement that reconfirms both parties' commitment to the existing strategic partnership in China and around the world. 

Under the Agreement, the companies also commit to exploring potential cooperation opportunities in upstream, midstream and downstream. The Agreement was signed by CNOOC Chairman Wang Yilin and Shell Chairman Jorma Ollila. Chinese Premier Li Keqiang, who is on an official state visit to London, and British Prime Minister David Cameron witnessed the signing of the Agreement. 

CNOOC Chairman Wang Yilin said: "We are delighted to see our strategic partnership with Shell taking a step further under the Agreement. It is another milestone for our already fruitful, mutual-beneficial cooperation. I look forward to deeper and more extensive cooperation with Shell."

CNOOC and Shell have enjoyed an excellent partnership in and outside China in both upstream and downstream projects including offshore Yinggehai off Hainan Island and a successful petrochemicals joint venture in Huizhou, Guangdong province. The parties are also working together in liquefied natural gas (LNG) projects and upstream deepwater projects including in Gabon and Brazil among others. 

Ben van Beurden, Shell's CEO, said: "We are very happy to reconfirm our commitment to the Shell-CNOOC strategic partnership that has borne many fruits. We are committed to growing business together with CNOOC and other Chinese partners and cooperating with them internationally to bring more clean energy to China."