CNOOC Successfully Commences Production at Dongfang

CNOOC has successfully begun Phase I of Dongfang (DF) 1-1, the Company's largest independent gas field.

About 110 kilometers offshore from Dongfang city of Hainan province, DF 1-1 is located in Yinggehai of Beibu Gulf in the Western South China Sea. The average water depth is about 70 meters.

DF1-1 is scheduled to be developed in two phases. Phase I is consisted of a central platform, a production platform and an onshore processing terminal. With twelve production wells, the designed production capacity of Phase I is about 154.8 million cubic feet per day. After the completion of Phase II, the production capacity of the field is expected to be 232 million cubic feet per day. The second phase development is expected to be accelerated from 2008 to 2006.

Natural gas from DF 1-1 Phase I will be piped to Hainan province for customers including fertilizer plant, power plant and city gas.

Mr. Wei Liucheng, Chairman and CEO of CNOOC limited commented, "The startup of gas field DF1-1 represents another milestone in the successful execution of our gas strategy. The field will provide feedstock and clean energy to Hainan while adding production and cash flow to shareholders."

"It is a positive development to the Company. It helps us make up production shortfall from the other gas field we own. " Commented Mr. Zhou Shouwei, President of the Company.

CNOOC limited is the operator and has a 100% interest in the field.