Douglas-Westwood Ltd. has just released another forecast on global oil and gas production and spending – The World Offshore Oil & Gas Production & Spend Forecast 2008-2012. If these analysts are right (and they’ve got a solid track record), there will be a lot of money going into production developments over the next four years. And a lot of the money will be spent in China.
According to the report, operators have transferred expenditure from shallow water in the North Sea and Gulf of Mexico (GoM) to deep water in the GoM, Brazil, and West Africa. Interestingly, over 50% of the global spend over the forecast period will go to the North Sea, the GoM, and the South China Sea. Most people in the industry would expect to see high production spending in the first two regions listed, but the last might come as a surprise to some.
The fact is, though, that China National Offshore Oil Corp (CNOOC) has been dumping large amounts of cash into domestic offshore production in its move to decrease dependence on foreign oil. According to the company’s Q1 report, oil production was up 3.7% over 2007, and net gas production reached 601 MMcf/d, an increase of 9.3% over 2007. CNOOC produced 40.46 million metric tons of oil and gas in 2007.
The South China Sea is receiving special attention at CNOOC, which had a number of oil and gas discoveries in the region last year. The company is continuing exploration in the region in cooperation with Petro-China, the Philippine National Oil Co., and Shell.
As China maneuvers to fuel domestic growth, we should expect to see considerably more E&P activity, not only in the South China Sea, Bohai Bay, and Beibu Gulf (a.k.a. the Gulf of Tonkin), but in the many international areas where CNOOC is forging new cooperative relationships.
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