CNOOC's Penglai oil field starts output

Offshore oil and gas major China National Offshore Oil Corp said its Penglai 25-6 oil field area 3 project, located in the south-central part of the Bohai Sea, has started production ahead of schedule.

With an average water depth of about 27 meters, the project is expected to reach its peak production of about 11,511 barrels of crude oil per day in 2023, the company said in a statement on Monday.

In addition to fully utilizing the existing processing facilities of Penglai oil fields, the project has built a new wellhead platform, with 58 development wells planned in all, including 38 production wells and 20 water injection wells.

CNOOC holds a 51 percent stake in Penglai 25-6 oil field area 3 project and acts as the operator. Subsidiaries of ConocoPhillips hold the remaining 49 percent stake.

Analysts said the Penglai project will further guarantee China's energy security and high-quality development of the country's offshore gas sector.

CNOOC has been stepping up its efforts to ramp up domestic gas output in recent years, which is also in accordance with the government's efforts to ensure domestic energy consumption, said Li Ziyue, an analyst with BloombergNEF.

"CNOOC has been active in increasing exploration and production activities this year despite low commodity prices," said Li.

"The Penglai 25-6 oil field area 3 project is the ninth new project of CNOOC in China this year, launched ahead of schedule. Until the third quarter, CNOOC's total production in China rose 11 percent compared with the same period last year."

This is one of the latest efforts the company has made to ensure energy security and adequate storage, as the government has pledged to make energy security a key priority in the country's 14th Five-Year Plan (2021-25), with focus on diversifying supplies, developing sufficient storage capacity and infrastructure.

The National Energy Administration has come up with a seven-year action plan early last year, an attempt to ensure China's energy security. It called for the three major State-owned energy giants, including CNOOC, to boost the country's oil and gas reserves and production.

The company's Dongfang 13-2 gas fields project, China's largest offshore high-temperature and high-pressure gas field project with an annual gas output of more than 3 billion cubic meters, has also been operationalized in December, which is expected to meet the gas demand of 1 million people for 15 years, it said.

The Dongfang 13-2 project is located offshore near Dongfang in Hainan province. It supplies directly to regions in South China through subsea pipelines. It is expected to ensure clean energy supply for the building of the Guangdong-Hong Kong-Macao Greater Bay Area and the Hainan Free Trade Port.

Wang Dongjin, chairman of CNOOC Ltd, said earlier the company will continue working to forge more cooperation agreements, in order to achieve sustainable development. CNOOC has signed more than 200 contracts with 81 global oil companies in recent years, attracting more than $30 billion in foreign capital.

The company has achieved a total net production of 131.2 million barrels of oil equivalent in the third quarter, up 5.1 percent year-on-year. Production in China increased by 10.4 percent year-on-year to 88.6 million barrels of oil, mainly due to the commencement of new projects, including Luda 21-2, Luda 16-3 and Dongfang 13-2 gas fields, it said.

It has made four new discoveries and successfully drilled 14 appraisal wells during the period. New breakthroughs were made in the expanded exploration of the buried hills near Bozhong 19-6 in offshore China, which is expected to be a mid-sized oil and gas structure.

Overseas, the 17th and 18th new discoveries of Yellowtail-2 and Redtail-1 were made in the Stabroek block in Guyana, a country in northern South America, further increasing the recoverable resources of the block.

Four new projects also commenced production in the third quarter, including the Nanbao 35-2 oil field S1 area, the Jinzhou 25-1 oil field 6/11 area, the Liuhua 16-2 oil field/Liuhua 20-2 oil field joint development project and the Bozhong 19-6 condensate gas field pilot area, it said.