CNOOC Ltd, a Chinese offshore oil and gas company, said Friday that it had reached a preliminary agreement to buy a stake in a group of Australian gas fields for US$320 million, and that it had stepped up output of Indonesian oil, two further signs of China's rapid expansion in East Asia's energy markets.
But CNOOC also announced Friday that its profits had fallen to 3.62 billion yuan (US$437 million) in the first half, down 21.6 percent from the comparable period last year. The company nearly tripled its spending on exploration for new oil and gas fields in the period, part of a stepped-up push by Chinese enterprises to find more supplies of energy.
At the same time, lower international oil prices cut into the company's sales, which were little changed despite extra production from the Indonesian oil and gas fields it bought in January for US$585 million.
CNOOC had predicted that it would take a stake in Australia's Northwest Shelf gas fields when its controlling shareholder, the state-owned China National Offshore Oil Co, concluded an agreement on Aug. 8 to buy US$11 billion to US$13 billion worth of liquefied natural gas from the fields over the next 25 years. The gas is to be delivered over a port being built in Shenzhen, adjacent to Hong Kong, which will use one-third of the gas; the rest will go to other areas of the surrounding province, Guangdong.
CNOOC said some details of Friday's deal were still to be worked out with the six energy companies that now own the Australian fields, including Royal Dutch/Shell, BP, ChevronTexaco and BHP Billiton along with two smaller companies. The 5 percent stake CNOOC will acquire will come in equal portions from the existing partners' holdings.
Energy companies are ordinarily reluctant to sell stakes in oil and gas operations once those operations go into production, as the Australian fields have. But the Chinese authorities required that CNOOC be allowed to buy a stake, in part to let the company gain experience with offshore production of liquefied natural gas.
Erwin Sanft, an energy analyst with CLSA, said that CNOOC appeared to be getting its stake at a 20 percent discount to the market value of Australian gas reserves.
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