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Overseas Business

CNOOC emphasizes the effectiveness of operation, management innovation and cooperation overseas, continuously optimizes its global business arrangement and strengthens soft power, steadily improves overseas business management quality, pursues economic efficiency of production, promotes values of overseas assets and improves the sustainability of overseas business.

CNOOC Ltd. continued to be well recognized by the international capital market. In 2017, it continued to be listed in Platts “Top 250 Global Energy Company Ranking” and was awarded again “Best Investor Relations Company (China)” and “Asia’s Best CEO (Investor Relations)” by Corporate Governance Asia. It was also awarded the titles of “Deals of the year by sector - Oil and gas deal of the year” and “Best Deals by Country - Oil and gas deal of the year” by “The Asset Triple A Asia Infrastructure Awards 2017” and the title of “Corporate Awards – Platinum”, organized by The Asset. In addition, it was awarded “2017 China Securities Golden Bauhinia Awards - Best Board Secretary of Listed Companies” by Ta Kung Wen Wei Media Group.

  • Asia
    • Asia (excluding China) was the first overseas region entered into by the company, and it 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 2017, reserves and daily production volume derived from Asia (excluding China) reached 225.4 million BOE and 82,958 BOE/day, respectively, representing approximately 4.7% of the company’s total reserves and 6.4% of its daily production.

      Indonesia

      At the end of 2017, the company’s asset portfolio in Indonesia consisted of four development and production blocks. Among these, the company acted as the operator for the Southeast Sumatra block, the Madura Strait PSC was a joint operation block, in which the BD gas field commenced production in 2017, and other gas fields were under appraisal and construction. The company, as a non-operator, also holds working interests in the production sharing contracts of Malacca PSC.

      The company owns an interest of approximately 13.90% in the Tangguh LNG Project in Indonesia. In 2017, production volume of Phase I of the Project remained stable. Currently, construction of the third LNG train of Phase II is in progress as planned, and is expected to reach completion and commence production in 2020.

      Iraq

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

      In 2017, the company continuously drilled development wells and adopted production enhancement measures of Missian project, resulting in a steady increase in daily net production to approximately 42,000 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 2017, reserves and daily production volume derived from Oceania reached 69.0 million BOE and 22,598 BOE/day, respectively, representing approximately 1.4% of the company’s total reserves and 1.8% of its daily production.

      Australia

      The company owns a 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 2017, 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.

  • Africa
    • Africa is a relatively large oil and gas reserve and production base for the company. The company’s assets in Africa are primarily located in Nigeria and Uganda. As of the end of 2017, reserves and daily production volume in Africa reached 136.9 million BOE and 73,625 BOE/day, respectively, representing approximately 2.8% of the company’s total reserves and 5.7% of its daily production.

      Nigeria

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

      In 2017, the Akpo oilfield maintained stable production, with net production reaching approximately 56,000 barrels per day. The Egina project is in the engineering construction stage. During the year, the Preowei-3 well was successfully appraised.

      The company also holds a 20% non-operating interest in Usan oilfield in the OML138 block in offshore Nigeria, and an 18% non-operating interest in the OPL 223 and OML 139 PSC respectively.

      We will countinue 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 the Lake Albert Basin, one of the most promising basins for oil and gas resources in Africa.

      In 2017, the company, as the operator of EA 3A, completed the front end engineering design (FEED) for ground construction and drilling.

      In 2017, development and production licenses for eight oilfields in the EA1 and EA2 blocks were issued by the government and the FEED initiated. The intergovernmental agreement (IGA) for an oil pipeline was signed and the FEED was completed.

      Other Regions in Africa

      Apart from Nigeria and Uganda, the company owns interests in several blocks in the Republic of the Congo, Algeria and the Gabonese Republic. In 2017, the company also obtained a 65% operating interest in AGC Profond block in offshore Senegal and Guinea-Bissau.

  • North America
    • North America has become the company’s largest overseas reserves and production region. The company holds interests in oil and gas assets in the U.S., Canada and Trinidad and Tobago, as well as shares in MEG Energy Corporation in Canada. As of the end of 2017, the company’s reserves and daily production volume in North America reached 1,260.6 million BOE and 132,675 BOE/day, respectively, representing approximately 26.0% of the company’s total reserves and 10.3% of its daily production.

      The U.S.

      The company currently holds an average of 27% and 12% interests in the Eagle Ford and Niobrara shale oil and gas projects in the U.S. respectively.

      In 2017, net production of the Eagle Ford project remained stable and averaged 53,000 BOE/day.

      Additionally, the company owns interests in two major deepwater development projects, Stampede and Appomattox, and a number of other exploration blocks in the US Gulf of Mexico through its wholly-owned subsidiary, Nexen Energy ULC (“Nexen”). Among these, Stampede commenced production in February 2018.

      Canada

      Canada is one of the world’s richest place of oil sands resources, and participation in the country’s oil sands development will make a major contribution to the company’s sustainable growth. Through its Nexen subsidiary, the company owns a 100% working interest in the oil sands project located at Long Lake, as well as three other oil sands leases in the Athabasca region of northeastern Alberta. In 2017, the production of Long Lake project ramp up to approximately 40,000 BOE/day.

      The company holds a 25% interest in the Hangingstone oil sands project. The project commenced production in 2017. We also hold a 7.23% interest in the Syncrude project and non-operating interests in several other exploration and development leases.

      The company holds a 100% interest in two exploration blocks in offshore Newfoundland.

      In addition, the company holds approximately 12.39% of shares in the MEG Energy Corporation, a listed company on the Toronto Stock Exchange.

      Other Regions in North America

      The company owns 12.5% interest in the 2C block and a 17.12% interest in the 3A block in Trinidad and Tobago, respectively, of which the 2C block is in production. Phase III of the natural gas project yielded stable production and achieved favorable economic returns. The company also owns a 100% exploration interest in the deepwater exploration block 1 and block 4 of the CINTURON PLEGADO PERDIDO in Mexico respectively.

  • South America
    • In South America, the company’s major holdings consist of a 50% interest in the Bridas Corporation (“Bridas”) and a 10% interest in the PSC for the Libra oilfield in Brazil. The company’s 50% interest in Bridas is accounted for by equity methods. As of the end of 2017, the company’s reserves and daily production volume derived from South America reached 444.8 million BOE and 46,770 BOE/day, respectively, representing approximately 9.2% of the company’s total reserves and 3.6% of its daily production.

      Argentina

      The company holds a 50% interest in Bridas and makes joint management decisions. Bridas holds a 40% interest in Pan American Energy (“PAE”) in Argentina and a 100% interest in AXION Refinery. In December 2017, Bridas exchanged the 10% interest in PAE held by BP with the 50% interest in AXION. After the settlement of the upstream and downstream asset swap, Bridas holds 50% interest in PAE and AXION respectively.

      Under the low oil price environment in 2017, the company sought to strike a balance between production and return, enhanced its operating efficiency, optimized operating plans and created innovative development plans. Daily net production for Bridas averaged approximately 46,000 BOE/day.

      Brazil

      The company holds a 10% interest in 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 square kilometers and a water depth of approximately 2,000 meters.

      Ten appraisal wells have been drilled as of the end of 2017 under the Libra project. In November 2017, the Libra Consortium declared the commerciality of the northwest area and named it as the Mero field, which includes 4 production units of Mero 1, Mero 2, Mero 3 and Mero 4. Extended well test has been implemented to test Mero 2 and Mero 3 and started production. Final Investment Decision (FID) of Mero 1 has been approved and it has entered the construction phase.

      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 to seek new drivers for production growth.

      The company additionally holds a 100% interest in the 592 block and a 20% interest in the ACF Oeste block.

      Guyana

      The company holds a 25% interest in Stabroek block in offshore Guyana. Seven exploration discoveries have been made in the block. In 2017, the Liza and Payara reservoirs were successfully appraised and two new discoveries, namely Snoek and Turbot, were obtained, which further confirmed the reserve scale. FID was approved for Liza oilfield Phase I and production is planned to commence in 2020.

      Other Regions in South America

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

  • Europe
    • The company’s holds interests in several oil and gas fields such as Buzzard and Golden Eagle in the North Sea. As of the end of 2017, the company’s reserves and daily production volume derived from Europe reached 89.2 million BOE and 100,046 BOE/day, respectively, representing approximately 1.8% of the company’s total reserves and 7.8% of its daily production.

      United Kingdom

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

      The United Kingdom is one of the company’s key overseas development areas, with key projects such as Buzzard and Golden Eagle substantially contributing to the company’s production. In 2017, the Buzzard oilfield’s net production averaged approximately 63,000 barrels/day. We will continue to intensify our oil and gas development efforts in the UK, and actively seek out exploration and development blocks with potential in order to achieve stable and sustainable development in the region.

      Other Regions in Europe

      The company holds a license issued by the government of Iceland for undertaking oil exploration operations in the Norwegian Sea, northeast Iceland. In addition, the company holds several frontier exploration licenses offshore Ireland.

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