Log in
E-mail
Password
Show password
Remember
Forgot password ?
Become a member for free
Sign up
Sign up
New member
Sign up for FREE
New customer
Discover our services
Settings
Settings
Dynamic quotes 
OFFON
  1. Homepage
  2. Equities
  3. Hong Kong
  4. Hong Kong Stock Exchange
  5. CNOOC Limited
  6. News
  7. Summary
    883   HK0883013259

CNOOC LIMITED

(883)
  Report
SummaryChartsNewsRatingsCalendarCompanyFinancialsConsensusRevisions 
SummaryMost relevantAll NewsAnalyst Reco.Other languagesPress ReleasesOfficial PublicationsSector newsMarketScreener Strategies

China's CNOOC dives into uncharted deep waters in bold gas pivot

07/09/2021 | 06:42am EDT
FILE PHOTO: China National Offshore Oil Corp (CNOOC) headquarters  in Beijing

SINGAPORE/BEIJING (Reuters) - When the first gas from CNOOC Ltd's new ultra-deep field in the South China Sea started flowing in late June to the world's largest customised floating platform 1,500 meters above the sea bed, it marked a key phase in China's gas drive.

For CNOOC, the output from one of Asia's deepest gas fields proved the company had the engineering chops to complete its first wholly-owned project on schedule and make significant strides towards its target of gas making up half its output portfolio by 2035, from 21% currently.

For China, the tapping of major gas reserves within its own waters supported its plan to use natural gas as a 'bridge fuel' that will help the country meet its goal of capping carbon emissions by 2030 while phasing out dirtier coal.

And for the broader energy sector, the start-up of Lingshui 17-2, with proven reserves of 100 billion cubic meters and wells sunk 4,000 meters below the seabed, shored up confidence that China's energy majors possess the technical and operational acumen to fulfill their gas ambitions even as international rivals slow fossil fuel development in favour of green energy projects.

"CNOOC doesn't make excuses for the gaseous part of its portfolio, having firmly pitched its tent with the camp that sees natural gas as a key transition fuel in the global pivot to clean energy," said Readul Islam, research analyst at Rystad Energy.

"Given China's demand for energy now, gas satisfies that demand with the lowest emissions baggage."

INNOVATION & EXPLORATION

First discovered in 2014 and located 150 km (93 miles) south of China's southernmost province Hainan, Lingshui is nearly four times deeper than CNOOC's independently operated Liuhua 16-2/20-2 oil field, which sits 410 metres below the surface in the Pearl River basin.

Globally CNOOC owns deepsea oil assets in tie-ups with Total in Nigeria and ExxonMobil in Guyana, and also jointly owns with Canada's Husky Energy Liwan 3-1, China's second-deepest gas project about 1,300 meters subsea in the South China Sea. But it has never operated its own deepwater gas field.

At peak capacity, Lingshui will pump 3 billion cubic meters a year, or 1% of China's current gas demand, and deliver 20% of CNOOC's total gas output by 2024.

"Despite development challenges and large investment, its sizeable reserve and production scale will make Lingshui a competitive project," said a CNOOC representative.

The launch of Lingshui would also spur development of nearby deepwater projects to form "a gas cluster of a trillion cubic meters' reserve" to supply Hong Kong, Guangdong, Guangxi and Hainan, the official said.

Key to the project's success has been the 23.6 billion yuan ($3.64 billion) Shenhai-1 ("Deep Sea-1"), a 53,000-tonne, 120-meter (395-ft) tall semi-submersible production and storage platform, the world's first of its scale, dedicated to the Lingshui wells.

The project incorporates engineering expertise from Britain's Wood Group and a complex subsea production system from Norway's Aker Solutions worth $200 million, including underwater control systems that can withstand extreme pressure and over 70 km (43 miles) of umbilical cables linking the subsea development to Shenhai-1.

"The success of the project is based on CNOOC's open and collaborative approach in partnering with international companies ... enabling the joint development of innovative solutions together," said Ouyang Xin, Aker Solutions' General Manager and Head of Subsea China.

Zhang Xianhui, analyst at Wood Mackenzie, said one of Shenhai-1's innovations is to store condensate, a light oil that coexists in gas reservoirs, inside the platform's columns, averting the need for separate floating storage for liquids.

"The successful development of a deepwater project of such scale and complexity will lead to technological breakthroughs (that are) vital to unlock other difficult-to-extract resources," said Baihui Yu, analyst at IHS Markit.

ON ITS OWN

Analysts said CNOOC had previously been expected to bring in an international partner to share costs and risk, but having gone through the entire cycle from discovery through execution on its own, it may have quietly dropped the idea.

"Given the current U.S.-China tensions, convincing a board to take up a position in China, and at a potentially elevated valuation, may be a tall ask," said Rystad Energy's Islam.

However, if CNOOC chose to divest, Lingshui's size - with peak daily output estimated at 330 million cubic feet - could attract global firms looking to reposition themselves for energy transition, he added.

CNOOC did not comment on whether it is considering a global partner for Lingshui.

($1 = 6.4804 Chinese yuan renminbi)

This story corrects penultimate paragraph to say Lingshui "could attract global firms" rather than is "too big for them"; corrects spelling of Aker Solutions in 13th paragraph.

(Reporting by Chen Aizhu in Singapore and Muyu Xu in Beijing; Editing by Shivani Singh, Gavin Maguire and Richard Pullin)

By Chen Aizhu and Muyu Xu


© Reuters 2021
Stocks mentioned in the article
ChangeLast1st jan.
AKER ASA -0.30% 675 Real-time Quote.20.89%
AKER SOLUTIONS ASA -0.94% 17.93 Real-time Quote.10.03%
CNOOC LIMITED 0.12% 8.23 End-of-day quote.14.62%
LONDON BRENT OIL -0.30% 75.35 Delayed Quote.46.00%
MSCI SINGAPORE (GDTR) 0.31% 6532.371 Real-time Quote.11.90%
S&P GSCI NATURAL GAS INDEX -0.62% 247.9633 Delayed Quote.113.43%
TOTALENERGIES SE -0.21% 38.65 Real-time Quote.9.69%
UNITED PARCEL SERVICE INC -0.20% 192.97 Delayed Quote.14.59%
UNITED STATES DOLLAR (B) / CHINESE YUAN IN HONG KONG (USD/CNH) 0.07% 6.45362 Delayed Quote.-0.70%
WTI -0.57% 72.145 Delayed Quote.50.62%
All news about CNOOC LIMITED
01:19aSinopec Acting Chairman Sees China Oil Consumption Peaking Around 2026
MT
09/16SAUDI ARABIAN OIL : Guyana grants Saudi Aramco unit one-year contract to market ..
RE
09/15CNOOC : China calls for better reporting of mineral reserves for energy security
RE
09/15China to Launch First Crude Oil Auction Next Week; Oil Stocks Rise
MT
09/13Hang Kong Hang Seng Down 1.5% on Tech Slump, Beijing Regulatory Outlook
MT
09/13Hong Kong shares drop, dragged lower by tech on latest crackdown
RE
09/09China to Auction Crude Oil Reserves as Commodity Prices Surge
MT
09/09Exxon Mobil discloses another oil discovery offshore Guyana
RE
09/09EXXON MOBIL : Makes Discovery Offshore Guyana
MT
09/09ExxonMobil Builds on Guyana Resource Estimate With New Discovery
DJ
More news
Analyst Recommendations on CNOOC LIMITED
More recommendations
Financials
Sales 2021 234 B 36 188 M 36 188 M
Net income 2021 69 213 M 10 726 M 10 726 M
Net Debt 2021 101 B 15 631 M 15 631 M
P/E ratio 2021 4,38x
Yield 2021 9,95%
Capitalization 305 B 47 209 M 47 252 M
EV / Sales 2021 1,74x
EV / Sales 2022 1,62x
Nbr of Employees 18 151
Free-Float 35,0%
Chart CNOOC LIMITED
Duration : Period :
CNOOC Limited Technical Analysis Chart | 883 | HK0883013259 | MarketScreener
Technical analysis trends CNOOC LIMITED
Short TermMid-TermLong Term
TrendsBullishNeutralNeutral
Income Statement Evolution
Consensus
Sell
Buy
Mean consensus BUY
Number of Analysts 21
Last Close Price 6,83 CNY
Average target price 9,90 CNY
Spread / Average Target 45,0%
EPS Revisions
Managers and Directors
Ke Qiang Xu Chief Executive Officer & Executive Director
Qing Long Xia President & Executive Director
Wei Zhi Xie Chief Financial Officer
Dong Jin Wang Chairman
Xiaonan Wu Joint Secretary & Compliance Officer
Sector and Competitors
1st jan.Capi. (M$)
CNOOC LIMITED14.62%47 209
CONOCOPHILLIPS48.11%79 314
EOG RESOURCES, INC.48.33%43 188
CANADIAN NATURAL RESOURCES LIMITED43.31%40 986
PIONEER NATURAL RESOURCES COMPANY39.31%38 309
ECOPETROL S.A.16.48%28 158