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China National Offshore Oil Corp (CNOOC), the nation's third-largest oil company, said it aims to increase its domestic oil and natural gas output by more than 7 percent from the current level by 2008.
The company - the parent company of Hong Kong and New York listed CNOOC Ltd - also plans to heavily invest in the emerging natural gas sector and downstream business including refinery, fertilizer, or possibly power plants.
The business strategy reflects the company's ambition to become a top-notch international company able to compete with ExxonMobil, BP or Royal Dutch/Shell.
Fu Chengyu, chairman of the company, said commercial targets include turnover exceeding US$20 billion, daily oil and gas output of 1 million barrels of oil equivalent, overseas production making up 30 percent of the company's total, and an integrated business structure covering both upstream, middle stream as well as downstream business.
To meet the long-term target, the company plans to raise its domestic oil and gas production to 40 million cubic metres of oil equivalent by 2008 from about 37 million cubic metres of oil equivalent last year, said Fu at the company's annual working conference last month.
The total profit oil, including both domestic and overseas production, is expected to increase to 220 million barrels of oil equivalent from 130 million barrels last year. Profit oil refers to the amount of oil CNOOC can get from joint production with foreign partners.
By 2010, CNOOC's domestic production should reach 50-55 million cubic metres of oil equivalent, and overseas profit oil should reach 20 million cubic metres of oil equivalent, Fu said.
Other than a production increase, downstream business is another focus for CNOOC which aims to catch up with its international rivals.
Fu said investment in its downstream business, ranging from petrochemical complexes, refineries, fertilizers, bitumen to liquefied natural gas (LNG) projects and natural gas pipelines, will reach more than 100 billion yuan (US$12 billion) in the next five years.
CNOOC will pay half of the investment while local and foreign partners fund the other half.
CNOOC's investment in downstream business will account for 30 percent of the company's total investment in the coming five years.
"Middle and downstream business should take off in four or five years and become the pillar industry of the company," said Fu. "The business structure change will help the company become a real integrated energy company."
At present, the company is working with Shell to construct a world-class petrochemical complex in South China's Guangdong Province.
It is also considering building its first refinery to produce 12 million tons of oil products a year. Meanwhile, the company is also building the nation's largest fertilizer plant.
According to Fu, the gas business will play an important role in downstream business.
The company is building China's first two LNG projects in South China's Guangdong and Fujian provinces, using LNG imported from Australia and Indonesia.
(China Daily March 9, 2004)
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