Offshore oil, gas output set to rise

The production of offshore oil and gas in China is expected to increase this year, as the country's top offshore oil and gas driller China National Offshore Oil Corp has discovered a high-yield well in the Beibu Gulf that produces over 1,000 cubic meters of oil equivalent daily, industry experts said.

CNOOC Ltd said on Tuesday that the Wushi 16-5 structure, located in Wushi Sag, Beibu Gulf at an average water depth of 25 meters, was tested to produce over 1,000 cubic meters of oil equivalent per day, the first well of such productivity in Wushi Sag.

The discovery is expected to become a medium-sized oilfield. By far, the total proved oil in-place of Wushi oilfields has exceeded 100 million cubic meters, it said.

The appraisal well WS16-5-4 was drilled and completed at a depth of 4,185 meters, encountering a total of 65 meters oil pay zones, it said in a statement.

China's offshore oil and gas production is expected to rise further this year, said Li Ziyue, an analyst with BloombergNEF.

Investment in offshore oil and gas exploration is expected to increase further, with more than half of this year's domestic oil increment likely to come from offshore sources, she said, adding that the country's ongoing investment and focus on upstream production will be crucial for ensuring its energy security.

The nation increased investment in offshore oil production last year, with major development projects and offshore oil and gas production hitting records, said Wang Zhen, head of the CNOOC Energy Economics Institute.

The government has been stepping up efforts to ensure sufficient energy supply in the country. It set up the Innovation Consortium for Deep and Ultra-deep Oil and Gas Exploration and Development in July to gather insights and build strength to jointly boost new quality productive forces and contribute to the country's energy security.

All these efforts are expected to lead to an upward trajectory in the overall supply of petroleum in the near future, said Chen Lin, a senior analyst who covers upstream research at global consultancy Rystad Energy.

While the development of onshore conventional oil and gas in China has faced multiple challenges such as insufficient resource replacement and rapid production decline, replacement resources in new areas are crucial for ensuring future oil and gas supply, said Chen.