ZHANJIANG, Guangdong: CNOOC Ltd, China's biggest offshore oil explorer, may double its crude oil and natural gas production in the western part of the South China Sea to meet rising energy demand in the country.

China's third-largest oil company may expand its output in the area to 20 million cu m by 2015 from 10 million cu m, or 38.97 million barrels, last year, Ke Luxiong, deputy general manager of CNOOC's Zhanjiang division, said after a media tour of the unit's operations in the southern city.

Increased energy demand in the world's fastest-growing major economy is prompting CNOOC to intensify exploration in the area. A number of overseas companies have shown "immense" interest in joining CNOOC's bid to develop deepwater blocks in the region, Xie Luhong, head of the CNOOC unit, told reporters in Zhanjiang in Guangdong province on Dec 4.

"The deepwater areas are said to hold a significant amount of resources," Qiu Xiaofeng, a Shanghai-based analyst with China Merchants Securities Co, said. "CNOOC may need to enlist help from overseas partners in the beginning due to potential technical difficulties."

CNOOC plans to work with overseas partners to drill the first deepwater wells in the area next year, Xie said, without naming the companies. "The water depth might be between 1,500 m and 1,800 m," he said.

The company currently drills at a water depth of as much as 180 m in the region, according to Xie. "There is huge potential in the deepwater blocks in the South China Sea, most of which are expected to hold natural gas resources," Xie said.

CNOOC and its partners may spend about 200 billion yuan through 2020 to develop energy reserves in the South China Sea in the country's biggest push to tap oil and gas resources off its coast, Luo Donghong, chief development engineer at CNOOC's Shenzhen unit, said in November last year.

The western part of the South China Sea is CNOOC's "most important" natural-gas producing area, the company said on its website. Exploration partners include BG Group Plc, Devon Energy Corp and Roc Oil Co, Xie said.

As of the end of last year, CNOOC had proven reserves of oil and gas of 614.4 million barrels of oil equivalent in the region, data on its website show. That's 24.4 percent of the company's total.

CNOOC had targeted to increase production in the area by about 13 percent to 44.069 million barrels this year, Xie said. "The goal can be met under normal conditions," he said, without elaborating.

CNOOC, which gets more than 70 percent of its output from domestic offshore fields, is boosting production to benefit from a rebound in fuel demand as China's economic growth accelerates. The company said in January it aims to produce 225 million to 231 million barrels of oil equivalent this year.

The South China Sea, spanning 3.5 million sq km, stretches from Singapore to the Taiwan Straits.

Bloomberg News

(China Daily 12/08/2009 page14)