CNOOC sticks to the global vision and promotes its overseas development strategy at a steady pace.

CNOOC International Limited

CNOOC International Limited (hereinafter referred to as “CNOOC INT’L”), is a company organized and existing under the laws of British Virgin Islands, have its correspondence office located in No.25 Chaoyangmenbei Dajie, Dongcheng District, Beijing, P. R. China. CNOOC International Ltd. is the 100% subsidiary of CNOOC Ltd who is in charge of all overseas activities such as M&A and operation.

We currently have operations and assets in various foreign countries and regions, including Indonesia, Australia and Nigeria.

As of December 31, 2006, our net proved reserves in our overseas properties were 145.3 million barrels of crude oil and 1,636.5 billion cubic feet of natural gas. For 2006, net production from our overseas properties averaged 23,973 barrels per day of crude oil, condensate and natural gas liquids and 130.3 million cubic feet of natural gas, representing approximately 6.4% and 26.5%, respectively, of our total daily net production of crude oil and total daily net production of natural gas.
The following table sets forth our principal overseas oil and gas properties under production or development as of December 31, 2006.

In 2006, we signed seven overseas petroleum contracts or agreements as follows:

Indonesia

In April 2002, our wholly owned subsidiary, CNOOC Southeast Asia Limited, acquired subsidiaries in Indonesia formerly owned by Repsol YPF, S.A. These Indonesian subsidiaries together hold a portfolio of interests in oil and gas production sharing and technical assistance contracts in areas located offshore and onshore Indonesia. The main businesses of the Indonesian subsidiaries are the exploration, development and production of oil and gas offshore and onshore Indonesia. Their main assets comprise a portfolio of interests in four production sharing contracts and a technical assistance contract in that region.

The interests owned by the Indonesian subsidiaries comprise the following assets:

• South East Sumatra Production Sharing Contract. The Indonesian subsidiaries own a 65.5409% interest in the South East Sumatra production sharing contract. This contract area covers approximately 8,100 square kilometers located offshore Sumatra and is the largest of the assets held by the Indonesian subsidiaries. It is operated and majority-owned by us. It is also one of the largest offshore oil developments in Indonesia and has produced more than one billion barrels of oil in over 30 years of production. The concession expires in 2018.
  
  
• Offshore North West Java Production Sharing Contract. The Indonesian subsidiaries own a 36.7205% interest in the Offshore North West Java production sharing contract. This contract area covers approximately 13,800 square kilometers in the Southern Java Sea, offshore Jakarta and has produced more than one billion BOE in over 20 years of production. It is operated by a member of the BP group and currently produces crude oil and natural gas. Its natural gas is sold to the Indonesia State Electric Company and the Indonesia State Gas Utility Company. The concession expires in 2017.
  
  
• West Madura Production Sharing Contract and Poleng Technical Assistance Contract. These subsidiaries own a 25.0% interest in the West Madura production sharing contract and a 50.0% interest in the Poleng technical assistance contract. These contract areas are located offshore Java, near the island of Madura and the Java city of Surabaya and cover approximately 1,600 square kilometers combined. Kodeco Energy Company is the operator for the West Madura production sharing contract and Korea Development Company is the operator for the Poleng technical assistance contract, each assisted by certain of the Indonesian subsidiaries. These contract areas currently produce crude oil and natural gas. Their natural gas is sold to the Indonesia State Electric Company. The West Madura production sharing contract expires in May 2011. The Poleng technical assistance contract expires in December 2013.
  
  
• Blora Production Sharing Contract. The Indonesian subsidiaries own a 16.7% interest in the Blora production sharing contract. This contract area lies entirely onshore Java and covers an area of approximately 4,800 square kilometers. There has been no production of crude oil or natural gas from this concession. The current operator is Lundin Blora B.V. The extended exploration phase for this production sharing contract will end in October 2007.

The remaining interests in the above assets at the time of our acquisition were owned by independent third parties, including Lundin Petroleum, BP, Kodeco, Kalila Energy, BG Group, Pertamina, INPEX, Kanematsu, Nissho Iwai, Nisseki Mitsubishi, Fortuna Resources (Sunda) Ltd., C. Itoh and Co. and Amerada Hess.

Tangguh. In 2003 and 2004, we acquired interests in the Tangguh project, a greenfield upstream LNG development project located in Indonesia.

In January 2003, we acquired BP Muturi Limited, which owned a 44.0% working interest in the Muturi production sharing contract offshore Indonesia, and BP Wiriagar Limited’s 42.4% working interest in the Wiriagar production sharing contract offshore Indonesia at a consideration of approximately US$275 million in total. In May 2004, we completed our acquisition of an additional 20.767% working interest in the Muturi production sharing contract from British Gas International Limited at a consideration of US$105.1 million. As a result, our working interest in the Muturi production sharing contract increased to 64.767%. The Muturi production sharing contract and Wiriagar production sharing contract, together with the Berau production sharing contract, make up the Tangguh project. Our interests in the Muturi and Wiriagar production sharing contracts represent 16.96% of the total working interest of the Tangguh project. BP is acting as the operator for this project.

The Tangguh project has entered into gas sale and purchase agreements with various buyers for its planned future production, including an LNG terminal project in Fujian Province, China developed by CNOOC, our controlling shareholder, and various partners.
Malacca Strait. In addition to our Indonesian subsidiaries and the acquisition of interests in the Tangguh LNG project, we have a 39.51% participating interest in a production sharing contract in the Malacca Strait in Indonesia.

Australia

North West Shelf. In May 2003, we signed an agreement with the original North West Shelf project partners to acquire an aggregate interest of 5.3% in the reserves and upstream production and exploration of Australia’s North West Shelf project for a consideration of US$348 million, plus an upfront tariff payment relating to certain LNG processing facilities of US$180 million. Woodside Petroleum is the operator for the North West Shelf project. Pursuant to the agreement, we also acquired a 25% interest in the China LNG Joint Venture, a new joint venture established by the six original partners to supply liquefied natural gas from the North West Shelf project to a liquefied natural gas terminal in Guangdong Province, China developed by CNOOC, our controlling shareholder, and various partners. The terms of this transaction require us to pay the other partners in the North West Shelf project for gas production and processing services provided over the term of the China LNG Joint Venture. The partners of the project signed a 25-year LNG supply agreement in December 2004 to provide liquefied natural gas to the Guangdong liquefied natural gas terminal starting in 2006. The North West Shelf project started commercial production in 2006.

Outer Browse Basin. In April 2006, we signed farm-in agreements with BHP Billiton Limited and Kerr-McGee Australia Exploration and Production Pty Ltd through our subsidiary, CNOOC Australia E&P Pty Ltd, and obtained a 25% interest in four exploration permits in the Outer Browse Basin of Australia.

Nigeria

In January 2006, we signed an agreement with South Atlantic Petroleum Limited to acquire a 45% working interest in the offshore oil-mining license “OML 130” in Nigeria. We completed the acquisition in April 2006 for an acquisition price of US$2.268 billion plus a working capital adjustment of US$424 million for financial, operating and capital expenditures. OML 130 has not yet begun commercial production.

In January 2006, CNOOC Africa Limited, our indirect wholly owned subsidiary, signed a share sale and purchase deed with ARED Projects Nigeria Limited to acquire a 35% working interest in the offshore oil prospecting license “OPL 229” in Nigeria for US$60 million. The acquisition was completed in December 2006. OPL229 is still in the exploration stage.

Equatorial Guinea

In February 2006, we signed a production sharing contract for Block S in Equatorial Guinea. Block S is an exploration block and covers a total area of approximately 2,287 square kilometers in the south offshore Equatorial Guinea. Block S is still in the exploration stage.

Myanmar

In 2004 and 2005, we, China Focus Development Ltd. (previously named Golden Aaron Pte. Ltd.) and China Global Construction Limited jointly entered into six production sharing contracts with Myanmar Oil and Gas Enterprise. We act as the operator under these production sharing contracts. The blocks under these production sharing contracts are still in the exploration stage.

Kenya

On April 28, 2006, through our indirect wholly owned subsidiary CNOOC Africa Limited, we signed production sharing contracts for six blocks in Kenya, namely Block 1, Block 9, Block 10A, L2, L3, and L4, with a total area of 115,343 square kilometers. These six blocks are located in the three basins of LAMU, ANZA and MANDERA. This project is in the exploration stage.

Philippines

On April 2, 2006, we signed a farm-in agreement through our wholly owned subsidiary CNOOC International Limited with PNOC Exploration Corporation, under which we acquired a 51% working interest in Block SC57 (also named Calamian) in the Philippines. We act as the operator for this project. This project is in the exploration stage.

Canada

In early 2005, through our wholly owned subsidiary CNOOC Canada Limited, we acquired a 16.69% stake in MEG Energy Corp. for consideration of 150 million Canadian dollars. MEG is principally engaged in the exploration and production of oil sands. By February 1, 2007, our holding in MEG Energy Corp. had dropped to 11.54% as a result of an issuance of new shares by MEG Energy Corp. in which we did not participate. On April 3, 2007, we spent approximately 120 million Canadian dollars for the purchase of additional shares of MEG Energy Corp. from an existing shareholder. We currently hold a 14.57% stake in MEG Energy Corp.

Singapore

We currently conduct all of our international oil sales through China Offshore Oil (Singapore) International Pte. Ltd., our wholly owned subsidiary, which is also engaged in oil trading activities.