CNPC offshore engineering unit makes foray into Southeast Asia

CNPC Offshore Engineering Co Ltd (CPOE) has made its first foray into Southeast Asia's offshore drilling services sector, securing a foothold in the international high-end offshore drilling market.

The company, a subsidiary of China National Petroleum Corp, officially launched its JUB offshore drilling project in Indonesia recently.

As the company's largest international contract to date, the project, valued at over 1 billion yuan ($140 million), has a term of four years and represents a significant milestone for China's offshore oil and gas industry.

The project has been launched at a time when the international offshore oil and gas exploration sector has been witnessing sustained expansion, with roughly 30 percent of global oil and nearly 50 percent of natural gas reserves located offshore.

As demand for deepwater exploration continues to grow as onshore resources become harder to access, future growth in the oil and gas sector is mostly likely to come from offshore in China, making it an important energy growth driver, CPOE said.

Over 60 percent of China's new crude oil output came from offshore production last year, reinforcing the ocean's role as the backbone of the country's energy expansion, according to the Ministry of Natural Resources.

Industry experts believe investments in the offshore sector will increase this year and through 2026.

Li Ziyue, an analyst with BloombergNEF, said, "China's offshore oil and gas output has great upside potential."

"The continuous upstream investment and production commitment by China's major oil and gas majors, including CNPC and China National Offshore Oil Corp, will play a critical role in China's energy supply security," she said.

According to a report released earlier by the CNOOC Energy Economics Institute, a think tank that is part of the energy giant, China's exploitation of offshore natural gas resources has been steadily advancing toward ultra-deep waters, as the nation's marine economy has emerged as a key driver in boosting energy reserves.

As global offshore crude oil contributes over 70 percent of new discoveries, offshore natural gas discovery remains an area of significant untapped potential. China's offshore resources are set to play a more significant role in energy security, said Wang Zhen, head of the CNOOC Energy Economics Institute.

CPOE has been actively pursuing its international strategy, focusing on the Southeast Asian offshore oil and gas services market, with Indonesia as a key target. The company views the JUB project as a foundation for further expansion in the region, it said.

According to global consultancy Rystad Energy, high oil prices and improved economics for offshore projects were the key drivers for this development.

It estimates that the offshore sector will most likely be the source that will drive growth in oil production for the rest of this decade.

This is the first international offshore drilling project of CPOE in the middle and high-end market. After the platform arrived at the shipyard, the project teams meticulously segmented the project into multiple aspects. Over the course of more than four months, they focused on quality control, safety management, design optimization and process improvements.