Cnooc’s H1 profit slips 19% on shutdown, costs

HONG KONG - China National Offshore Oil Corporation, or Cnooc, one of China’s three major state-owned oil producers, said on Tuesday that first-half profit fell 19 per cent as it grappled with rising costs and a drop in production from an oil spill in China’s Bohai Bay.

By (AP)

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Published: Wed 22 Aug 2012, 10:42 PM

Last updated: Tue 7 Apr 2015, 12:16 PM

The Beijing-based company made news in July with its $15 billion offer for Canadian oil and gas producer Nexen, which would be China’s biggest overseas energy acquisition and the latest sign of China’s hunger for overseas energy assets.

The company, China’s biggest offshore oil and gas producer, said net oil and gas production fell 4.6 per cent to 160.9 million barrels “mainly due” to the production shutdown at an oilfield in the bay off China’s northwest.

The shutdown followed the discovery last year of oil leaks at the Penglai 19-3 oil field, the largest in China, which the company operates jointly with US partner ConocoPhillips.

The public outcry over the spill’s environmental damage was a public relations setback for the company. It was ordered by the government to halt all production so a full cleanup could be carried out.

Rising industry costs and changes in the company’s assets structure also helped drag down profit. That pushed up Cnooc’s cost per barrel in the first half to $34.60, 13.1 per cent higher than in 2011, the company said.

Cnooc posted first-half profit of 31.8 billion yuan ($5 billion), or 0.71 yuan (12¢) per share, down from 39.3 billion yuan, or 0.88 yuan per share, from the year before.

Chief executive Li Fanrong was not optimistic about the rest of 2012.

“For the second half of the year, the world economy will likely to continue to bear the downward pressure and international oil prices are expected to become increasingly volatile,” he said in a statement.

He said the company would carry out follow up work to close the Nexen deal in the second half, which he was confident “will be able to create long term value for our shareholders.”

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