China signaled its openness for business with a raft of deals that would give oil majors, including Royal Dutch Shell PLC, new opportunities to develop offshore fields in partnership with the nation’s biggest maritime explorer.
China National Offshore Oil Corp (CNOOC, 中國海洋石油) said in Beijing yesterday that it had inked oil and gas accords with nine firms.
The signing ceremony followed Chinese President Xi Jinping’s (習近平) address to Chinese Communist Party cadres marking 40 years of reform and broadly underlining the nation’s commitment to global trade.
Photo: Bloomberg
The agreements cover 64,000m2 in the Pearl River basin, to a depth of up to 3,000m.
In addition to the Netherlands-based Shell, France’s Total SA and US-based Chevron Corp were also awarded parcels.
All three majors hold existing production sharing contracts (PSCs) with CNOOC.
The other firms involved are: ConocoPhillips, Equinor ASA, Husky Energy Inc, Kuwait Foreign Petroleum Exploration Co, Roc Oil Co and SK Innovation Co.
“It’s no coincidence that CNOOC made the statement a couple of hours after President Xi’s speech,” said Tian Miao (田苗), a Beijing-based analyst at Everbright Sun Hung Kai Co (大新鴻基). “It’s only reasonable to assume this [as] one of the real actions China is taking to show the world it’s willing to open businesses to the whole world.”
CNOOC has signed more than 200 PSCs since its inception in the early 1980s, even as it has increasingly relied on its own resources to tap deep-water projects in Chinese waters — most recently the giant Lingshui 17-2 gas field in the South China Sea.
CNOOC has promised to increase spending and raise output, heeding Xi’s call for enhanced energy security as imports grow and the nation contends with the US over trade.
“The agreements will facilitate the establishment of a long-term and stable cooperation and share the development opportunities to a certain extent in the strategic cooperation areas, creating conditions for the final signing of contracts,” CNOOC’s listed unit said in a statement.
The smallest of China’s big three oil and gas firms, CNOOC is its favored vehicle for international cooperation and holds the vast majority of reserves in Chinese waters.
About three-quarters of its offshore production is conducted independently, with the remainder tied up in PSCs, including deals signed in July with Australia’s Roc Oil and Smart Oil LLC of the US.
“From a business perspective, inviting international oil companies to join domestic offshore exploration helps reduce investment risks and bring in more offshore drilling expertise,” Tian said. “It definitely helps CNOOC’s promise to quickly raise oil and gas output from domestic fields.”
Xi’s earlier address in the capital disappointed those hoping for specific policies to counter a slowing economy and show the nation’s intent to free up its markets. Instead, he focused more on the accomplishments of the Chinese Communist Party.
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