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Overseas Business

In 2015, the overseas assets of CNOOC accounted for 37.2% of the total assets, and the overseas oil and gas assets and distribution grew more diversified. The company established presence in over 30 countries and regions and built several overseas oil and gas bases. In the year, CNOOC signed Addendum No.1 to Memorandum of Understanding with Gazprom and signed the agreement to expand joint capacity in Guangdong with Shell. The company ranked 32 in the Global Top 50 Oil Companies released by Petroleum Intelligence Weekly.

CNOOC Ltd.’s international business achieved great results. CNOOC Ltd. ranked 4th in the Platts Top 250 Global Energy Company ranking and topped the category of Exploration and Production and the region of Asia/Pacific Rim. It was awarded the “2015 Best CSR” and “2015 Best Investor Relations Company” by Corporate Governance Asia. In 2015, it produced 31.97 million tons of crude oil and 10.7 billion cubic meters of natural gas overseas. By the end of the 12th Five-Year Plan period, its overseas oil and gas production was 4.6 times and 2.6 times of that at the end of the 11th Five-Year Plan period.

  • Asia
    • Asia (excluding China) was the first overseas region that the company entered into and has become one of its major overseas oil and gas producing areas. Currently, the company holds oil and gas assets mainly in Indonesia and Iraq. As of the end of 2015, the reserves and daily production volume derived from Asia (excluding China) reached 208.9 million BOE and 70,987 BOE/day, respectively, representing approximately 4.8% and 5.2% of the company’s total reserves and daily production, respectively.

      Indonesia

      As of the end of 2015, the company’s asset portfolio in Indonesia consisted of three development and production blocks and a block under construction, among which, the company acted as the operator for the Southeast Sumatra block, while the Madura Strait PSC was a joint operation block. In addition, the company, as a non-operator, also holds working interests in the production sharing contracts in Malacca PSC.

      The company owns approximately 13.90% interest in the Tangguh LNG Project in Indonesia. In 2015, production volume of phase I of the Project remained stable. Currently, we are preparing for the development of the third LNG train of phase II, which is expected to be completed and commence production in 2019.

      Iraq

      The company holds 63.75% participating interest in the technical service contract of Missan oilfields in Iraq and acts as the lead contractor of these oilfields.

      In 2015, faced with the severe security conditions in Iraq, as well as declining production of mature oilfields and other difficulties, the company coordinated the development and production operations, strengthened its oil reservoir study, and adopted effective measures to increase production volume of mature wells. The newly drilled wells also achieved expected production levels. In 2015, the production of Missan oilfields increased steadily and averaged approximately 28,000 barrels per day.

  • Oceania
    • Currently, the company’s oil and gas assets in Oceania are mainly located in Australia and Papua New Guinea. As of the end of 2015, the reserves and daily production volume derived from Oceania reached 90.8 million BOE and 21,673 BOE/day, respectively, representing approximately 2.1% and 1.6% of the Company’s total reserves and daily production, respectively.

      Australia

      The company owns 5.3% interest in the Australian North West Shelf LNG Project. The project has commenced production and is currently supplying gas to end-users including the Dapeng LNG Terminal in Guangdong, China.

      In 2015, the North West Shelf LNG Project generated stable production and achieved favorable economic returns. The company also owns one exploration block in Australia, which is currently under appraisal.

      Other Regions in Oceania

      The company owns interests in four blocks which are still under exploration in Papua New Guinea and a joint research block in New Zealand.

  • Africa
    • Africa is one of the relatively large oil and gas reserves and production base for the company. The company’s assets in Africa are primarily located in Nigeria and Uganda. As of the end of 2015, the reserves and daily production volume derived from Africa reached 166.6 million BOE and 83,677 BOE/day, respectively, representing approximately 3.9% and 6.2% of the company’s total reserves and daily production, respectively.

      Nigeria

      The company owns 45% interest in the OML130 block in Nigeria. OML130 is a deepwater project comprised of four oilfields, namely, Akpo, Egina, Egina South and Preowei.

      In 2015, the Akpo oilfield maintained stable production and its net production averaged approximately 64,000 barrels per day. The Egina project is currently at the construction stage, with construction of production facilities such as Christmas trees and FPSO undergoing.

      In addition, Nexen Petroleum Nigeria Limited holds a 20% non-operating interest in Usan oilfield in the OML138 block in offshore Nigeria, together with a number of other discoveries and exploration targets. Nexen Petroleum Nigeria Limited made a new discovery in the area in 2015, namely Ukot South. Also, Nexen Petroleum Exploration & Production Nigeria Limited and Nexen Petroleum Deepwater Nigeria Limited hold an 18% non-operating interest in the OPL 223 and OML 139 PSC, respectively. We plan to utilize the synergy of Usan and OML130 projects to establish an oil and gas production base in West Africa.

      Uganda

      The company owns one-third of the interest in each of EA 1, EA 2 and EA 3A in Uganda. EA 1, EA 2 and EA 3A are located at Lake Albert Basin in Uganda, which is one of the most promising basins for oil and gas resources in Africa.

      In 2015, the company, as the operator of EA 3A, took great efforts to promote the development of the Kingfisher oilfield. The field is still under research at the preliminary development stage, and has currently completed the Pre-FEED of the crude oil pipeline.

      In 2015, the FDP/PRR preparation for all oil and gas fields (excluding Kingfisher) in the reserved areas in the EA1 and EA2 blocks, in accordance with the government’s review requirements, were completed and submitted to the government of Uganda for the application of production licenses, and is currently awaiting government’s approval.

      Other Regions in Africa

      Apart from Nigeria and Uganda, the company also owns interests in several blocks in Equatorial Guinea, the Republic of The Congo, Algeria and the Gabonese Republic. In 2015, the company made a new discovery in REZ structure in Algeria.

  • North America
    • North America has become the biggest overseas reserves and production region of the company. The company holds interests in oil and gas assets in the U.S., Canada and Trinidad and Tobago, as well as part of the shares of MEG Energy Corporation in Canada. As of the end of 2015, the company’s reserves and daily production volume derived from North America reached 1,120.0 million BOE and 135,030 BOE/day, respectively, representing approximately 26.0% and 10.0% of the company’s total reserves and daily production, respectively.

      The U.S.

      The company currently holds 33.3% interest in two shale oil and gas projects in the U.S., namely the Eagle Ford and Niobrara shale oil and gas projects. In 2015, along with the increasing number of wells drilled, the net production of the Eagle Ford project continued to increase and averaged approximately 60,000 BOE/day. At the same time, upon the identification of the core region of the Powder River Basin for the Niobrara project, the project began to make contribution to the company. Under the current low oil price environment, our operators have slowed down asset development, which will impact our near-term production due to natural decline.

      In addition, the company owns interest in two major deepwater developments, Stampede and Appomattox, and a number of other exploration blocks in the U.S. Gulf of Mexico, through its wholly-owned subsidiary, Nexen Energy ULC (“Nexen”). The company also owns interests in several exploration blocks in offshore Alaska.

      Canada

      Canada is one of the world’s major regions with rich oil sands resources, and participation in oil sands development will be favorable to the sustainable growth of the company. In Canada, the company, through its subsidiary, Nexen, owns 100% working interest in the oil sands project located at the Long Lake as well as three other oil sands leases in the Athabasca region in northeastern Alberta. We also hold a 7.23% interest in the Syncrude project and a 25% interest in several other non-operated exploration and development leases.

      In 2015, the company continued the development of the Long Lake project. Its net production averaged approximately 30,000 BOE/day. For the oil sands project in Canada, under the low oil price environment, the company will leverage on its overall advantages, lower cost and enhance efficiency, and control the pace of investment to provide a solid resource safeguard for its long-term development.

      In addition, the company holds approximately 12.39% of the shares of MEG Energy Corporation in Canada, which is listed on the Toronto Stock Exchange. The company also owns a 60% interest in Northern Cross (Yukon) Limited, which owns oil and gas exploration blocks in the Yukon Province in Canada.

      Other Regions in North America

      The company owns 12.5% interest in the 2C block and a 12.75% interest in the 3A block in Trinidad and Tobago, respectively, of which the 2C block is in production. The engineering construction of phase III of the natural gas project progressed smoothly, and is expected to come on stream in the second half of 2016.

  • South America
    • In South America, the company mainly holds a 50% interest in Bridas Corporation (“Bridas”) and a 10% interest in the PSC of the Libra oilfield in Brazil, among which, the company’s 50% interest in Bridas is accounted for by equity methods. As of the end of 2015, the company’s reserves and daily production volume derived from South America reached 299.4 million BOE and 49,884 BOE/day, respectively, representing approximately 6.9% and 3.7% of the company’s total reserves and daily production, respectively.

      Argentina

      The company holds a 50% interest in Bridas and makes joint management decisions. Bridas holds 40% interest in Pan American Energy (“PAE”) in Argentina and 100% interest in AXION Refinery. Bridas engages in upstream oil and gas exploration and production activities as well as downstream refining activities in Argentina and other countries. The strength of upstream and downstream integration is gradually realized.

      In 2015, the company made considerable efforts to maintain normal operations and production in the operating areas and endeavored to overcome the bottleneck of operational resources, coordinate resources and improve operational efficiency. The production of Bridas increased slightly to approximately 49,000 BOE/day. The downstream refinery maintains a high level of operation capacity and research on facilities upgrade and expansion is currently conducting.

      Brazil

      The company holds a 10% interest in the Libra PSC, a deepwater pre-salt project in Brazil. The oilfield is located in the Santos Basin, with a block area of about 1,550 km2 and water depth of about 2,000 meters. In 2015, a successful appraisal was made in the Libra project, which further reinforced the confidence in exploration and appraisal in the block.

      Brazil is one of the world’s most important deepwater oil and gas development regions. The company will fully leverage on the development opportunities of the Libra project in Brazil to seek a new growth point for production growth.

      Other Regions in South America

      The company also holds interests in several exploration and production blocks in Colombia.

  • Europe
    • The company holds interests in several oil and gas fields such as Buzzard and Golden Eagle in the North Sea. As of the end of 2015, the company’s reserves and daily production volume derived from Europe reached 103.8 million BOE and 110,842 BOE/day, respectively, representing approximately 2.4% and 8.2% of the company’s total reserves and daily production, respectively.

      United Kingdom

      The company’s asset portfolio in the North Sea consists of projects under production, development and exploration, mainly including: a 43.2% interest in the Buzzard oilfield, one of the largest oilfield in the North Sea, and a 36.5% interest in the Golden Eagle oilfield, making the company the largest crude oil operator in the North Sea.

      The United Kingdom is one of the company’s key overseas areas, as several key projects such as Buzzard and Golden Eagle have contributed considerably to the company’s production. In 2015, the net production of Buzzard oilfield averaged approximately 72,000 barrels per day. In the future, we will continue to intensify our efforts in the oil and gas development in the UK, and actively look for potential exploration and development blocks in order to achieve a stable and sustainable development in the region.

      Other Regions in Europe

      The company holds a license issued by the government of Iceland for carrying out oil exploration operations in the Norwegian Sea, Northeast Iceland. The project is at exploration and appraisal stage and completed offshore 2D seismic data acquisition and related appraisal work.

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