CNOOC Limited's total budgeted net production volume in 2006 is approximately 168-170 million barrels of oil equivalent (BOE), approximately a 9% year-on-year (YOY) increase over the estimated 153-157 million BOE in 2005. Net production offshore China is estimated to be 148-149 million BOE in 2006. The Company's overseas output is expected to be enhanced by the North West Shelf Project in Australia, which is scheduled to supply gas to Guangdong LNG terminal in the first half of this year. With this project, the Company's net entitlement overseas is expected to reach approximately 20-21 million BOE (with reference of WTI US$55.3/barrel).
During the year, ten projects offshore China are expected to come on stream, two of which are ready for production. Overall, for 2006 and 2007, it is expected that 16 projects will be completed.
On the exploration front, the Company plans to conduct more drilling, seismic acquisition activities offshore China, particularly in Bohai Bay and the South China Sea, in order to explore oil and gas potentials. Overseas exploration activities will be further strengthened. The exploration budget is estimated to increase 72% to reach the level of US$455 million and the reserve replacement ratio is targeted to be more than 100% in 2006.
At the same time, the Company expects to spend US$ 2.59 billion in development, a 30% YOY increase. In total, the Company's 2006 capital expenditure is budgeted at approximately US$3.06 billion, 35% up from last year's figure.
With the commencement of new gas projects and CNOOC's Guangdong LNG terminal, it is believed that the Company will further strengthen its leading position in gas business in coastal China.
Mr. Yang Hua, the CFO and Executive Vice President of the Company commented, "CNOOC Limited has been growing its production and reserve in the past few years. The Company has also been successful in maintaining its all-in production costs competitive among global peers. We will continue to execute our cost control to maintain our established advantage in 2006."
"Year 2006 will see CNOOC Limited becoming more active in exploring offshore China and overseas. We are confident that tight and well-scheduled operations with sufficient CAPEX will lead to more solid growth in reserves and production, securing stronger long-term growth base for the Company," commented Mr. Fu Chengyu, Chairman and Chief Executive Officer of the Company.
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