Offshore key to oil, gas boom

China is expected to reap more domestic energy from offshore resources this year, with offshore oil and gas exploration investment to continue rising, according to a recent report released by China National Offshore Oil Corp.

China's offshore crude production will continue rising in 2022 to an estimated 57.6 million metric tons, up 5.4 percent year-on-year, accounting for about 80 percent of the county's total crude increment, according to the China Offshore Energy Report drafted by the CNOOC Energy Economics Institute.

Offshore natural gas production this year will exceed 20 billion cubic meters, up 6.7 percent year-on-year, making up around 12 percent of the country's gas increment, it said.

According to Wang Zhen, head of the institute, crude production from offshore in 2021 is estimated to have reached 54.64 million tons, up 5.8 percent year-on-year, while natural gas output is likely to have totaled 19.6 billion cubic meters, up 5.4 percent.

Growth in the oil and gas sector will come mostly from offshore resources in China, which is expected to become an important energy growth driver in the years to come, he said.

The company said China's offshore crude increment last year accounted for more than 80 percent of the country's total growth volume, a record high, while the exploitation of offshore natural gas resources is steadily advancing toward even deeper waters.

Capital expenditure for offshore oil and gas was around 64.8 billion yuan ($10.19 billion) to 72 billion yuan last year, up 20 percent year-on-year. Exploitation accounts for 61 percent, followed by exploration at 17 percent and production at 20 percent, it said.

Li Ziyue, an analyst with BloombergNEF, believes China's offshore oil and gas production is expected to continue rising during the 2022 to 2024 period, while its continuous upstream investment and production commitment will also play a critical role in China's energy supply security.

China undertook several major offshore oil and gas exploration projects last year with continuous investment in the sector. It plans to have 17 offshore oil and gas projects in operation. By the end of the third quarter of last year, 10 of them were already in operation.

According to Wang Dongjin, chairman of CNOOC, the company's oil and gas production is expected to rise more than 6 percent each year during the 2022-24 period, while the company will also lay out a new energy industry strategy to enhance its position as the country's top offshore oil and gas driller.

The company will conduct oil exploration, focusing on increasing capacity and storage of oil and gas, and adopting advanced technologies to bolster China's energy security and reduce its reliance on foreign energy resources, Wang said.