* CNOOC 2013 output target below avg annual growth forecast
* 2013 output forecast based on WTI assumption of $90/bbl
* 2013 capex to jump 31-52 pct yr/yr
* CNOOC struggling to stem output declines at ageing fields
By Charlie Zhu
HONG KONG, Jan 30 Top Chinese offshore oil and
gas producer CNOOC Ltd said it plans to boost spending
to produce up to 2 percent more of the fuels in 2013, below a
five-year average growth target, highlighting the need for the
state giant to make acquisitions.
The company -- which is acquiring Canadian energy firm Nexen
Inc for $15.1 billion in China's largest ever overseas
takeover -- has forecast 6 percent to 10 percent compound annual
output growth in 2011-2015, partly by focusing on unconventional
resources, like oil sands and shale gas.
The low 2013 production growth target showed the company is
struggling to prevent output declines at its existing fields --
many of which are ageing, analysts say.
"Clearly the underlying declines of the existing aging
fields are so severe that they completely offset the
contributions from the smaller new fields," said Gordon Kwan,
Head of Energy Research at Mirae Asset Securities.
"This might explain the urgency to acquire and bolt on Nexen
to fill this year's performance growth gap and ensure that the
firm's long term 6-10 percent production (growth) target between
2011-2015 could still be achieved," he added.
CNOOC has said the acquisition of Nexen would boost its
production by 20 percent and proven reserves by 30 percent.
CNOOC has nine years of reserves based on current production,
one of the lowest ratios among major oil companies worldwide.
"The company is confident to achieve its production growth
target of 2011-2015," CNOOC said in a filing with the Hong Kong
bourse on Wednesday.
CNOOC Chief Financial Officer Zhong Hua said in a conference
call the forecast growth for 2011-2015 was backed by a strong
project pipeline and its overseas projects. Most of the growth
will come from domestic fields, he said, adding, however, that
this year's growth would mainly come from abroad.
The company expects 10 new oil and gas fields offshore China
to come on stream this year, he said, adding that most of the
projects will start production towards the end of 2013, boding
well for the firm's 2014 production.
Zhong reiterated the company is confident it would complete
the takeover of Nexen by the end of March and it is still
waiting for approval from the U.S. government because Nexen has
assets in the U.S. Gulf of Mexico.
FLAT OUTPUT, SURGING CAPEX
The Chinese company is targeting reserve replacement ratio
of more than 100 percent for this year, he said.
CNOOC aims to produce 338 million-348 million barrels of oil
equivalent (boe) this year, compared with estimated output of
341-343 million boe in 2012, it said. The 2012 output estimates
were roughly in line with the company's target of 335-345
million boe set for last year.
The 2013 output forecast was based on assumption that
international crude benchmark West Texas Intermediate (WTI)
would average $90 per barrel this year, compared with
average oil price of $94.1 in 2012, CNOOC said.
The production forecast has incorporated the assumption that
CNOOC's Penglai 19-3 oilfield in eastern China's Bohai Bay,
suspended since September 2011 after being hit by an oil spill,
would resume production later this year, Zhong said.
CNOOC is still seeking Chinese regulatory approvals to
restart production at the oilfield, in which U.S. oil firm
ConocoPhillips acts as operator and owns a 49 percent
stake. CNOOC Ltd has the remaining 51 percent stake.
The Chinese company has earmarked $12 billion-$14 billion as
capital expenditure for exploration, development and production
for this year, up from $9.3 billion-$11.0 billion it set for
Analysts say CNOOC's surging upstream spending would boost
the earnings of its sister company China Oilfield Services Ltd
, which announced on Wednesday that its capital
expenditure would reach 4 billion to 5 billion yuan this year.
"With twenty-four new projects under construction, the year
of 2013 is expected to be a new peak of engineering and
construction," CNOOC said.
Shares of CNOOC ended up 1.9 percent on Wednesday ahead of