Chinese oil major, CNOOC, has reported plummeting First Half profits after last year's Penglai spill limited production.
China's third-largest state-owned oil company has reported a significant reduction in First Half profits as its net oil output decreased 4.6% year-on-year. Production in Bohai Bay, home to the now-infamous Penglai 19-3 oil field, dropped by four million barrels to 72 million barrels in the first six months.
As a result of the incident, the Chinese operator's profits slipped 19%. ConocoPhillips, which jointly operates the oil field with CNOOC, reported production was currently running at quarter capacity with daily output trailing at only 30,000 barrels.
CNOOC's H1 revenues were 118.4 billion yuan ($18.6bn) in 2012, compared with 124.6 billion ($19.6bn) a year earlier, while output dropped to 160.9 million barrels of oil equivalent, in spite of overseas output increasing by three million barrels in the First Half. Nonetheless, CNOOC CEO Li Fanrong still expects the company to achieve its production target of 330 to 340 million barrels of oil equivalent for the year.
This target is likely to be helped by the oil giant's announcement of two new offshore discoveries in the Bohai Sea and Pearl River Estuary areas. Luda 6-2, situated in the northeastern Bohai Sea, has an average depth of 31 metres and is predicted to produce 850 barrels-per-day. Lufeng 15-1, situated in the waters of the Pearl River Mouth Basin, has a 283 metre depth with a projected daily output of 800 barrels.
While good news for the nation's domestic oil industry, the new finds will be a drop in the ocean compared to the 207,000 barrels-per-day production increase CNOOC will see if its acquisition of Nexen's assets is successful. The Canadian company's oil and gas assets include production platforms in the North Sea, the Gulf of Mexico and Nigeria, as well as oil sands reserves in Alberta.
Despite years of careful planning and CNOOC's preparatory acquisition of OPTI Canada, Nexen's partner, the deal is still subject to approval from the Canadian government. The $12.5 billion dollar deal is drawing heavy criticism from the U.S., which is concerned about the potential loss of further key oil and gas resources to China.