CNOOC likely to miss output target this year
By Richard Fu |
October 8, 2011, Saturday
|
Print Edition
Print Edition
CHINA'S top offshore oil producer CNOOC Ltd may miss this year's output target because of production disruptions at its main field following oil spills, a Sanford C. Bernstein & Co report said.
The central government last month ordered all production to be suspended at the Penglai 19-3 project, China's largest offshore oilfield in which CNOOC holds 51 percent, after ruling that ConocoPhillips, the US oil giant which operates the field, failed to contain leaks that began in June.
The closure, along with delays in completing a stake purchase in an Argentine oil producer, has already forced CNOOC to cut its annual output estimates from 355 million-365 million barrels of oil equivalent to 331 million-341 million barrels.
"Production targets for this year are likely to be missed and next year will continue be challenging," Bernstein analysts Neil Beveridge and Ying Lou wrote in a note yesterday. "The Penglai field will remain shut until the year end and will take longer than expected to ramp up in 2012."
But the analysts said the "rare" leaks are unlikely to have a significant impact on the rest of CNOOC's offshore fields and its long-term growth plans. "The oil leak at Penglai appears to have been caused by production related to reservoir deformation induced by water injection. This is relatively rare within the industry and partly related to the complexity of the field," they said.
Bernstein also lowered its price target for Hong Kong-listed CNOOC to HK$16.50 (US$2.1) from HK$17.50. CNOOC shares, having lost 16.5 percent since China ordered the closure of the entire Penglai 19-3 field on September 2, rose 4.4 percent yesterday to HK$12.84.
The central government last month ordered all production to be suspended at the Penglai 19-3 project, China's largest offshore oilfield in which CNOOC holds 51 percent, after ruling that ConocoPhillips, the US oil giant which operates the field, failed to contain leaks that began in June.
The closure, along with delays in completing a stake purchase in an Argentine oil producer, has already forced CNOOC to cut its annual output estimates from 355 million-365 million barrels of oil equivalent to 331 million-341 million barrels.
"Production targets for this year are likely to be missed and next year will continue be challenging," Bernstein analysts Neil Beveridge and Ying Lou wrote in a note yesterday. "The Penglai field will remain shut until the year end and will take longer than expected to ramp up in 2012."
But the analysts said the "rare" leaks are unlikely to have a significant impact on the rest of CNOOC's offshore fields and its long-term growth plans. "The oil leak at Penglai appears to have been caused by production related to reservoir deformation induced by water injection. This is relatively rare within the industry and partly related to the complexity of the field," they said.
Bernstein also lowered its price target for Hong Kong-listed CNOOC to HK$16.50 (US$2.1) from HK$17.50. CNOOC shares, having lost 16.5 percent since China ordered the closure of the entire Penglai 19-3 field on September 2, rose 4.4 percent yesterday to HK$12.84.
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