March 2007

CNOOC insists Chunxiao production ongoing as planned Posted Tuesday, March 6, 2007 - 6:36 by petromin
China's largest offshore oil producer, China National Offshore Oil Corp., has reported the Chunxiao gas field in the East China Sea, where China and Japan have differences over resource exploration rights, is "ongoing as planned," CNOOC Chairman Fu Chengyu said Tuesday.

"We have nothing new to report about (Chunxiao), all procedures are ongoing as planned," Fu said when releasing the company's half-year results. "About the problem in East China Sea, we plead the media not to overstate the matter. Both the Chinese and Japanese governments are working together to solve the borderline dispute. We hope the governments sit down and try to reach a deal on co-development."

A notice on the company's website earlier this month quoted Zhang Guobao, head of China's State Development and Reform Commission, as confirming Chunxiao has entered "the state of full-fledged development and production" in July.

But the information was deleted from the website after the Japanese media reported the news.

The Chunxiao field, named "Shirakaba" by Japan, is a few kilometres west of the Japan-designated median line that ostensibly separates the two countries' 200-nautical-mile exclusive economic zones.

Beijing does not recognize the line and claims its EEZ stretches further to the edge of the continental shelf, nearer Japan's Okinawa Prefecture.

Japan is concerned China might siphon resources that could be buried under Japan-claimed waters east of the line.

In January, CNOOC said it was ready to start production in the Chunxiao field in the first half of 2006, but the company added then the timing of production is "in the government's hands."

"We are not conflicting ourselves. Progress of some projects could be affected by factors like typhoon or seawater flow. We do not want to outpace the negotiating process carried out between governments (on Chunxiao). Professionally speaking, on stream production is not what the public thinks it is," Fu said.

CNOOC posted record high financial and operating results in the first half 2006 with revenues, net profits and net production all increased steadily.

Total revenue rose 47.2 percent to 48.34 billion yuan ($6.1 billion) from first half of 2005. Net profit reached 16.28 billion yuan, a year on year increase of 37.6 percent, and net oil and gas production rose by 7.4 percent to 81.7 million barrels of oil-equivalent.

The company generated 35.48 billion yuan from oil and gas sales, 43.4 percent more than last year's first half, as the average realized oil price reached $62.39 per barrel, up 42.1 percent. Earnings per share were 0.39 yuan.

Fu said the results are favoured by the external operating environment and the company's operational performance.

Chief financial officer Yang Hua said the company paid 1.99 billion yuan in windfall profit tax imposed since March this year. He said he cannot give an estimate of whole-year windfall tax payment because it depends on oil prices.