China looks to ocean resources for energy needs, international cooperation

Offshore areas of China will become a major energy growth driver in the country for years to come, especially in the oil and gas sector, in which its increment will come mostly from offshore resources in China, analysts said.

China's offshore crude increment last year accounted for a record high of more than 80 percent of the country's total growth volume, while the exploitation of offshore natural gas resources is also steadily advancing toward ultra-deep waters, said the Energy Economics Institute under the China National Offshore Oil Corp (CNOOC), the country's largest offshore driller.

The institute believes that China's offshore oil and gas output will continue increasing this year. Offshore crude output will rise 5.4 percent to 57.6 million metric tons, accounting for around 80 percent of the country's total crude increment. Offshore natural gas production will exceed 20 billion cubic meters, up 6.7 percent year-on-year and making up around 12 percent of the country's gas increment, it said.

The Chinese market remains resilient, and the country's carbon peak and neutrality ambitions and its energy transition will further accelerate the development of its offshore energy production, it said.

Li Ziyue, an analyst with BloombergNEF, said China's offshore oil and gas output has great upside potential in the years to come.

CNOOC, for example, expects its oil and gas production to rise more than 6 percent each year during the 2022-24 period, while its continuous upstream investment and production commitment will also play a critical role in China's energy supply security, Li said.

CNOOC accounted for more than half of China's total oil and gas output growth in 2021, while the driller is also seeking to use its engineering prowess to become a major player in offshore wind power projects, she said.

The company said earlier that it would further take advantage of the company's offshore advantages while laying out the new energy industry to enhance its position as the country's top offshore oil and gas driller.

CNOOC's offshore oil and gas production projects are ranked tops in the world, according to the China Offshore Energy Report drafted by the institute this year.

CNOOC will conduct oil exploration, focusing on increasing the storage capacity of oil and gas, and adopting advanced technologies to bolster China's energy security and reduce its reliance on foreign energy sources, said Wang Dongjin, chairman of CNOOC.

According to the report, China is one of the most active regions for offshore exploration and ranks fourth in newly launched offshore oil and gas production projects.

Luo Zuoxian, head of intelligence and research at the Sinopec Economics and Development Research Institute, believes the country's offshore oil and gas output will continue increasing this year.

For example, the exploration breakthrough this year of offshore shale oil, the unconventional product derived from shale rock fragments, represents a major technological milestone, he said.

CNOOC tapped the commercial flow of oil and gas from a shale exploration well in the Beibu Gulf Basin of the South China Sea in July, the first successfully drilled offshore shale oil well in China. The Beibu Gulf Basin holds around 1.2 billion tons of prospective shale oil resources with broad prospects for future exploration, said CNOOC.

Luo added that China's acceleration of offshore oil and gas exploitation in recent years will further ensure national energy security while helping facilitate the dual-circulation development paradigm and cultivate new competitive advantages in the coming years.

China's technology in fields of deep-water oil and gas exploration and exploitation has been advancing in recent years, and CNOOC is expected to go deeper and further in the sphere in the future, said Luo.

According to CNOOC, the company has been stepping up cooperation with international oil companies in recent years, including Hague-based Royal Dutch Shell, California-based Chevron, Houston-based ConocoPhillips, France's Total, Norway's Equinor, Kuwait Foreign Petroleum Exploration, Calgary-based Husky Energy, Sydney-headquartered Roc Oil and South Korea's SK Innovation to seek oil and gas in offshore China.

The company has also invited foreign companies to bid for domestic blocks to further tap the potential of China's offshore oil and gas development with mutually beneficial cooperation.

The offshore oil industry, which usually requires high investment, advanced technological development and high risk, is one of the industries attracting the most foreign investment in the country, it said.