CNOOC's Offshore China Production Increased 22.7%

CNOOC Limited reported production growth offshore China of 22.7% in the third quarter of 2004 from the same quarter last year to reach the level of 33.4 million barrels of oil equivalent (mmboe). Crude oil and liquids production was 28.6 million barrels (mmbbl) and natural gas production was 27.6 billion cubic feet (bcf). The increase was largely due to a 67.0% increase in crude oil and liquids production in Eastern South China Sea and a 72.0% increase in natural gas production from Western South China Sea. Offshore China production for the first nine months of this year increased 13.6% YOY.

The Company's reported total net entitlement production increased 14.4% from 32.5 mmboe in the third quarter of 2003 to 37.2 mmboe in the same period this year. Crude oil and liquids production and natural gas production was 31.1 mmbbl and 35.3 bcf, respectively. Indonesian assets contributed a total working interest production of 8.3 mmboe.

Total unaudited revenues were RMB11.4 billion (US$1.373 billion) for the third quarter of 2004, a 65.5% increase from the third quarter of 2003. This revenue growth was a result of higher realized oil price and production growth. Total revenues for the first nine months of this year increased by 29.9% YOY to RMB 27.6 billion (US $3.33 billion). The average realized oil and gas prices were US$40.28 per barrel and US$2.87 per thousand cubic feet respectively in the third quarter. And YTD average realized oil and gas prices were US$35.12 per barrel and US$2.87 per thousand cubic feet. Indonesian operations contributed revenues of RMB1.057 billion (US$127.7 million) and EBITDE of RMB657.5 million (US$79.4 million) for the quarter. ''Our revenues increased significantly as a result of not only high oil price but also significant production growth offshore China,'' commented Mr. Fu Chengyu, Chairman and Chief Executive Officer.

''The strategy and execution are delivering sound results. We are leveraging strong oil prices operationally to achieve strong financial results,'' said Mark Qiu, Chief Financial Officer.

CFD 11-1/11-2 came on stream in July, ahead of the schedule. CNOOC Limited also made one wildcat and seven appraisal successes offshore China in the third quarter. "It was another solid quarter, all major development projects were progressing on track. We are going to meet key operating targets for the year," commented Mr. Zhou Shouwei, President of the Company.

Third Quarter and Year-to-Date Offshore China Production Summary


                                     2003                   2004
    Crude Oil & Liquids               Q3         YTD         Q3         YTD
    (mmbbl)
    Bohai Bay                       12.31       34.79       12.46      35.72
    Western South China Sea          5.01       17.29        5.12      15.82
    Eastern South China Sea          6.47       19.43       10.80      26.44
    East China Sea                   0.24        0.72        0.19       0.62

       Subtotal (mmbbl)             24.03       72.23       28.57      78.60

    Natural Gas (bcf)
    Bohai Bay                        4.40       12.56        4.47      12.44
    Western South China Sea         12.65       31.01       21.77      56.96
    Eastern South China Sea            --          --          --         --
    East China Sea                   1.12        3.59        1.39       4.57

       Subtotal (bcf)               18.17       47.16       27.63      73.97

    Total Production                 27.2        80.6        33.4       91.6
    (mmboe)


    Third Quarter and Year-to-Date Revenue and Expenditure (Unaudited)

                                           RMB millions
                                    2003                  2004
                                     Q3        YTD         Q3         YTD
    Sales Revenue
    Crude oil and liquids         6,119.0   19,242.0   10,455.6   25,120.0
    Natural gas                     621.0    1,682.0      789.3    2,152.5
    Marketing Revenue, net           37.0       76.0       86.7      187.7
    Others                           91.0      228.0       34.9      104.9
       Total                      6,867.0   21,228.0   11,366.5   27,565.1

    Capital Expenditures
    Exploration                     169.9      934.3      747.4    1,718.4
    Development                   1,957.1    5,348.6    3,595.5    8,445.9
    Others                        1,949.1    4,296.2       11.3    5,021.6
       Total                      4,076.0   10,579.2    4,354.3   15,185.9


                                            US$ millions(1)
                                     2003               2004
                                       Q3      YTD       Q3        YTD
    Sales Revenue
    Crude oil and liquids            739.3   2,324.9   1,263.3   3,035.1
    Natural gas                       75.0     203.2      95.4     260.1
    Marketing Revenue, net             4.5       9.2      10.5      22.7
    Others                            11.0      27.5       4.2      12.7
       Total                         829.7   2,564.9   1,373.3   3,330.5

    Capital Expenditures
    Exploration                       20.5     112.9      90.3     207.6
    Development                      236.5     646.2     434.4   1,020.5
    Others                           235.5     519.1       1.4     606.7
       Total                         492.5   1,278.2     525.9   1,834.8

         (1)  Converted to US dollars at; RMB 8.2765 = US$1.00


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