Offshore Upswing: CNOOC Spend Highest Since 2014

China's state-owned offshore oil and gas producer CNOOC Ltd said it is confident of achieving its spending target this year, the highest since 2014, as its responds to a call to build up the nation's petroleum output and reserves.

The company plans to spend 70 billion to 80 billion yuan ($10.3 billion to $11.8 billion) on exploration and production, CNOOC said in a press release on Wednesday, compared with an expected 63 billion yuan in capital spending for 2018.

Beijing has called on the state oil giants to increase domestic exploration to help meet strong crude demand and counter falling output from maturing fields. This came after President Xi Jinping urged oil companies in August to improve national security by boosting domestic production and reserves.

In response to the government's call, CNOOC pledged last week to double its exploration activities and proven oil and gas reserves in China over the next seven years.

The company is allocating more spending this year on domestic exploration and production, which will make up 62 percent of total expenditures versus last year's 51 percent.

"Our main focus will be exploring for large- to medium-sized oil and gas fields ... and will speed up exploration of natural gas," the company said in a presentation of its plans published on its website.

Domestic exploratory drilling will take up 12 billion yuan, or 76 percent of total exploration spending, while overseas work will account for the remaining 24 percent.

The 12 billion yuan compares with 10 billion yuan estimated in 2018 and is nearly double to that of 2016.

In global exploration, CNOOC will speed up spending on the Stabroek block offshore Guyana, where an Exxon Mobil-led consortium that includes the Chinese company has tapped recoverable reserves of 5 billion barrels of oil equivalent.

CNOOC expect to bring six new projects, including the Egina oilfield in Nigeria and the Huizhou 32-5 oilfield in the South China Sea, on stream in 2019, the company said.

It also expects to drill 173 exploration wells this year, it said.

The company said its total oil and gas production will reach 480 million to 490 million barrels of oil equivalent in 2019, up from 475 million barrels in 2018.

It will further reduce its cost of producing a barrel of oil in 2019, said company Chief Executive Officer Yuan Guangyu at a presser, without giving a specific figure.

CNOOC's domestic production will account for 63 percent of its total production in 2019, compared with 65 percent last year, the company said.

(Reuters reporting by Meng Meng in Beijing and Aizhu Chen in Singapore; Editing by Tom Hogue)