Caspian Sea Partners Exercise Pre-emptive Rights

BG Group, has informed CNOOC Limited of a decision by certain of the existing owners of the North Caspian Sea Project in Kazakhstan to exercise their pre-emption rights and acquire the 1/12th (8.33%) interest in the Project which BG had agreed to sell to the Company. In accordance with the terms of the Sale and Purchase Agreement, the Company will terminate its agreement with BG with respect to the Company's acquisition of this interest.

"The decision is consistent with owners' rights, driven by the consideration of self-interests and not that unexpected even though we would have liked a different one. But the event itself has no adverse impact on the strategy and operating fundamentals of CNOOC Limited," said Mr. Wei Liucheng, Chairman and CEO of CNOOC Limited.

"We continue to stick to our strategy and to look out opportunistically for quality assets that add value to our shareholders," commented Dr. Mark Qiu, CFO of the Company.

The Company and BG entered into an agreement dated March 7, 2003 for the Company to acquire the interest from BG. The completion of the agreement was subject to the satisfaction of a number of conditions including the waiver of certain pre-emption rights.


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