CNOOC cuts capital budget, starts production from Jinzhou 9-3

CNOOC Ltd. is slashing its capital budget for 2015 by 26-35% to $11.25-12.86 billion compared with last year’s budget. Capital expenditures for exploration, development, and production respectively account for 21%, 67%, and 10% of the budget.

“In response to challenges from falling oil prices, we will control our costs and strive for the effective implementation of our capital expenditure plan in order to improve the overall performance of the company,” said Zhong Hua, CNOOC chief financial officer.

“Facing the complicated and highly volatile macroenvironment in 2015, the company will continue to strengthen the management of internal operations and make efforts to meet annual operational targets,” said Li Fanrong, CNOOC chief executive officer.

“Meanwhile, the company will ensure an appropriate balance between short-term return and long-term development, and implement prudent capital investment plan in order to continuously carry out its ‘New Leap Forward’ strategy,” Li said.

Production launch, targets

Separately, the company has started oil production from its Jinzhou 9-3 comprehensive adjustment project, which lies in 6.5-10.5 m of water in the North Liaodong Bay in the Bohai Sea.

The main production facilities include one central processing platform, one wellhead platform, and 21 producing wells. There are currently 15 wells producing 7,600 b/d of crude. The adjustment project is expected to reach its ODP designed peak production of 12,000 b/d in 2015.

CNOOC in October made a “mid-to-large” oil and gas discovery in its Jinzhou 23-2 well in the northern part of Liaodong Uplift in 10 m of water (OGJ Online, Oct. 24, 2014).

Jinzhou 9-3 is an independent oilfield in which CNOOC holds 100% interest and acts as the operator.

The company also reported its business strategy and development plan for 2015, in which it will target production of 475-495 million boe. Production from China and overseas will account for 67% and 33%, respectively.

Estimated net production for 2014 is 432 million boe, and production targets for 2016 and 2017 are respectively 509 million and 513 million boe.

Including Jinzhou 9-3, CNOOC plans to bring seven projects on stream this year. The Kenli 10-1 project and the Bozhong 28/34 comprehensive adjustment project in Bohai are expected to reach peak production of 36-30,000 boe/d, respectively.

The company plans to drill 162 exploration wells and acquire 36,000 km of 2D seismic data as well as 14,000 sq km of 3D seismic data. The reserve replacement ratio is targeted at more than 100%.

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