December 19, 2018 / 5:59 AM / a year ago

UPDATE 2-China's CNOOC to boost exploration spending, signs strategic deals

 (Recasts; adds analyst comment on new exploration deals)
    BEIJING/SINGAPORE, Dec 19 (Reuters) - China's CNOOC Ltd
          indicated a renewed commitment to oil and gas
exploration on Tuesday as its chairman said it would raise
spending to a record while signing strategic exploration
agreements with nine firms for the South China Sea.
    The strategic agreements cover Blocks A and B in the Pearl
River Mouth Basin in the northern section of the South China
Sea, offshore Guangdong province.             
    The nine firms involved include Chevron Corp        ,
ConocoPhillips        , Equinor          , Husky Energy Inc
        , Kuwait Foreign Petroleum Exploration Co, Australia's
Roc Oil, Royal Dutch Shell          , SK Innovation            
and Total          .
    All of these firms have existing exploration and production
operations in China.
    The agreements follow increased efforts by China's state oil
and gas producers PetroChina          , Sinopec Corp          
and CNOOC to boost domestic oil and gas drilling, after a call
by President Xi Jinping to boost domestic energy supply
security.             
    The strategic cooperation agreements cover mostly
geologically challenging ultra-deepwater, high pressure or low
permeability reservoirs, Wood Mackenzie Analyst Andrew Harwood
said in a note on Wednesday.
    "Should these Strategic Cooperation Agreements progress into
full exploration contracts, CNOOC will retain operatorship,"
said Harwood, adding that the basin is believed to hold
significant deepwater gas and shallow water oil potential.
    The comments on the increased spending came from CNOOC
Chairman Yang Hua at a company event in Beijing on Tuesday where
the agreements were announced. 
    "Currently the central government highly values oil and gas
exploration and development and gave special directions," Yang
said, though he did not give details on the amount to be spent. 
    Yang said the government is likely to give favourable
policies to oil companies to support their offshore oil and gas
exploration. 
    Central government officials have met recently with
executives from China's three state-owned oil majors -
PetroChina            , Sinopec             and CNOOC - to
discuss plans to boost China's crude oil and natural gas output,
Yuan Guangyu, vice president of the CNOOC group said on the
sidelines of the event. 
    

 (Reporting by Meng Meng in Beijing and Chen Aizhu in Singapore;
Writing by Florence Tan; Editing by Tom Hogue and Christian
Schmollinger)
  
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