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Offshore oil producer reveals 'big margin' after 22% surge

CHINA National Offshore Oil Corp, the country's third-biggest oil producer, said sales jumped 22 percent last year and profit rose by "a big margin" as crude output increased and prices rose to a record.

Sales climbed to 198.3 billion yuan (US$29 billion), China National said yesterday. "All operational data reached a record high in 2008," it said, without going into details.

China National gets about two-thirds of its revenue from Hong Kong-listed subsidiary CNOOC Ltd, which increased production by 14 percent last year after United States oil prices reached a record in July.

Units China Oilfield Services and fertilizer producer China BlueChemical also contribute to China National's sales. China National's assets reached 428.5 billion yuan as of the end of 2008, according to yesterday's statement.

CNOOC aims to boost production to 225 million to 231 million barrels of oil equivalent (boe) in 2009. This compares to an estimated output of 194 million to 195 million boe for last year, it said.

However, revenue may decline this year. CNOOC made the 2009 output forecast assuming a West Texas Intermediate crude oil price, a benchmark, of US$60 a barrel, versus US$100.1 in 2008.

"The growth target is ambitious and challenging if oil prices continue to spiral lower," CLSA analyst Gordon Kwan said, adding that it was further evidence that Chinese energy firms were more aggressive than their global peers in exploration and development.

The growth will involve the start-up of 10 new fields, including an oil project off Nigeria and the Tangguh liquefied natural gas project in Indonesia, CNOOC said.

It plans to drill more than 80 wells this year, aiming for a reserve replacement ratio of more than 100 percent. The ratio reflects an energy company's ability to find or acquire reserves to replace those it produces.

Total capital expenditure planned for 2009 will reach US$6.76 billion, up 19 percent year on year, it said.

Chairman Fu Chengyu said: "We are confident of a continuing production and reserves growth in 2009.

"Next year, our exploration and development activities will be further strengthened."


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