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WoodMac: CNOOC partnering with 9 foreign O&G cos to explore Pearl River Mouth Basin

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Oilfield Technology,

China National Offshore Oil Corp (CNOOC) has announced that it has signed Strategic Cooperation Agreements with 9 companies, including Chevron, ConocoPhilips, Equinor, Husky, KUFPEC, Roc Oil, Shell, SK Innovation and Total.

Wood Mackenzie's research director, Andrew Harwood, has provided some comments on the news:

"The agreements cover cooperation on two offshore areas located in the Pearl River Mouth Basin, and are part of efforts by CNOOC to accelerate domestic exploration. The agreements were announced on the 40th anniversary of Deng Xiaoping's unveiling of China's historic Reform and Open Up policy, and can therefore be viewed as reaffirming China's desire to attract international investment into its upstream sector.

"The two Strategic Cooperation areas are understood to be prospective for ultra-deepwater, high pressure/high temperature, or low porosity/low permeability reservoirs.

"The international oil companies all have existing E&P operations in the country, and the agreements further demonstrate their commitment to involvement in China's energy sector.

"Should these Strategic Cooperation Agreements progress into full exploration contracts, CNOOC will retain operatorship. We expect the company to raise its domestic exploration spend and become more active in terms of exploration in 2019. The Pearl River Mouth Basin is believed to hold significant deepwater gas and shallow water oil potential, and Wood Mackenzie expects the majority of future exploration investment to target this area.

"CNOOC has set its sights on raising gas reserves by 50% by 2025 and developing further its deepwater expertise. These agreements will help the company achieve its targets and hone its technical skillset.

"Globally, Wood Mackenzie expects exploration budgets to remain steady in 2019. But with stronger prices, lower costs and a greater focus on commerciality, the exploration sector is now more resilient than ever, and is well positioned to generate positive full-cycle returns at oil prices of US$50/barrel or even lower."

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