OREANDA-NEWS. February 07, 2012. HONG KONG TOP Chinese offshore producer CNOOC Ltd said it plans to produce 2.4 percent more oil and gas in 2012 as more projects commence operation, and to further boost spending on exploration and production.

The state-run company said in a statement that it aimed to produce 330-340 million barrels of oil equivalent (boe) this year, compared with estimated output of 331-332 million boe in 2011, roughly in line with target.

The company, which has made a string of overseas acquisitions in recent years, is assuming WTI crude would average USD 90 per barrel this year versus USD 95.1 for 2011, it added.

CNOOC executives said the firm will still target 6-10 percent compound annual growth rates for production between 2011 and 2015, partly by pursuing deepwater projects in offshore China and investing more in unconventional resources.

Although many discoveries have been made in recent years, offshore China is still underexplored, Chief Financial Officer Zhong Hua told reporters at a briefing, adding that it planned to drill three independent deepwater wells in 2012.

UOB Kay Hian analyst Yan Shi said CNOOC is still in good shape for long-term development despite the disruption brought about by a recent oil spill.

CNOOCs 2011 output was hit hard by an oil spill at its Penglai 19-3 field in eastern Chinas Bohai bay, which resulted in total production losses of 5.9 million boe last year, he said.

President and CEO Li Fanrong said the oilfield, coowned and operated by ConocoPhillips, should resume production this year as it had already submitted a revised development plan for the project to Chinese authorities for approval.

In August, CNOOC lowered its 2011 output target from 355-365 million boe to 331-341 million largely because of the oil spill.

CNOOC said the expected output rise for this year would be supported by new projects.

More ... projects are expected to come onstream in offshore China in the next few years and become an important driver of the companys future production growth, CNOOC said, adding that four new projects were expected to come onstream this year.

Some of CNOOCs overseas projects, such as the Long Lake oil sands project in Canada and Missan oilfield in Iraq, are expected to deliver production contributions, CNOOC said, without giving details.

Chinese oil giants, including PetroChina Co Ltd and China Petroleum & Chemical Corp (Sinopec) , have invested heavily in natural resource projects overseas to fuel the countrys surging economy.

CNOOC closed its USD 2 billion acquisition of Opti Canada Ltd in November, giving the Chinese company its second stake in a Canadian oil sands property. It also signed deal with US natural gas producer Chesapeake Energy Corp for a 33.3 percent stake in a shale project.

Li said CNOOC would continue to search for acquisition opportunities and will further expand its portfolio of unconventional assets.

The companys capital expenditure (capex) was expected to reach USD 9.3-11 billion this year, compared with USD 8.77 billion forecast for last year, it said.

CFO Zhong said the higher capex also reflected increasing costs of labour and raw materials, and relatively high cost associated with the development of unconventional resources.