CNOOC to Boost Natural Gas to 20% of Business


The extended downturn of oil prices has made oil companies transform or upgrade. China National Offshore Oil Corporation (CNOOC), the largest offshore oil and gas producer in China, has decided to position natural gas as a pillar business from 2016 to 2020, elevating natural gas from 18% to over 20% of the business during the period. The firm is to expand natural gas applications and increase the supply of clean energies, according to the planning department at CNOOC. Furthermore, in addition to exploiting domestic resources like gas fields in the South China Sea, CNOOC will step up efforts to develop LNG overseas, establish a new green energy system and research new ocean energies continually.
In the first half of 2016, CNOOC Gas & Power Group sold 12.66 billion cubic meters of natural gas, up 11.7% from a year earlier. The company outsourced 7.68 million tons of LNG in H1, growing 24.4% YoY.
CNOOC has unloaded more than 80 million tons of LNG, and has established seven world-class LNG receiving terminals in places such as Fujian and Hainan. Two additional terminals in Shenzhen and eastern Guangdong are to be completed soon. Currently, CNOOC is capable of receiving over 28 million tons of foreign LNG per year. With a total installed capacity of 7.08 million KW, CNOOC’s natural gas power plants have generated 134.7 billion KWH of green electricity.
Given factors like prices, demand, resource structures and China’s development trends, natural gas became the company’s pillar business, according to CNOOC. More specifically, natural gas prices are relatively stable and lower compared with oil prices. Hence, when oil prices fluctuate sharply, natural gas business is to remain a strong support for CNOOC’s profits. Secondly, the nation’s natural gas consumption for 2016 may exceed 200 billion cubic meters. And in the next five years, the number is forecast to rise to 320-360 billion cubic meters, with the market to grow 50%-60% over the period. Next, look at the resource structures: In recent years, more gas has been newly discovered than oil. Finally from the perspective of development trends, natural gas, a relatively clean form of fossil energy, will play an important role in optimizing China’s energy structure.
CNOOC has established a complete industrial chain, and it has mastered core technologies applied to LNG receiving terminals and clean energy utilization.  
CNOOC has been reforming its downstream refining business since 2015, integrating dispersed refining and marketing companies into a new large one, which posted profits of RMB5.46 billion in the first three quarters of 2016, surging 174.37% from the previous year. Besides enhancing its ability to handle the risks of oil price volatility, the restructuring of CNOOC’s refining business also propels it to upgrade gasoline and diesel products. Taking CNOOC Huizhou Refinery as an example, all its products have met the national V standard. Huizhou Refinery project phase II is now under construction, and will produce national V standard gasoline and diesel in 2017, enabling Huizhou Refinery’s capacities to manufacture such products to exceed 12 million t/a.
On March 22, 2016 CNOOC and Shell agreed to invest RMB22.8 billion to expand their joint venture, CNOOC and Shell Petrochemicals Co., Ltd. Upon completion, the JV’s capacities to produce chemical products like ethylene will double. Ethylene capacity is to increase by 1.2 million t/a when the project phase II is on stream.