CNOOC Ltd, China's top offshore oil and gas company, expects to discover "a cluster of quality oil and gas fields" at Bohai Bay that will become a major driving force behind future output.

"Our major discoveries at Bohai Bay are close to each other. Therefore, we anticipate a cluster of quality oil and gas fields to be found there Bohai Bay will be a major driving force for our projected production growth in 2008 and beyond," said Yang Hua, executive vice-president of CNOOC, in Hong Kong yesterday.

PetroChina, China's leading oil producer, announced in March it had discovered China's biggest oilfield in the past decade at Bohai Bay. Almost simultaneously, CNOOC unveiled a find at Bohai Bay with a test output of 1,600 barrels of oil and roughly 10 million cubic feet of gas per day.

"While our production target for 2007 remains flat at 162 to 170 million barrels oil equivalent (BOE), the projected output is expected to hit 190 million next year. The increase will mainly come from offshore projects within China," Yang said.

CNOOC is undertaking steady exploration efforts to prepare for a production increase from next year, he said.

In the first quarter of 2007, CNOOC's capital expenditure increased by 70.3 percent to 6,333.6 million yuan, a result of intensive exploration and development activities.

A large part of the expenditure went to the OML 130 project in Nigeria, Yang said.

CNOOC and its partners also made two new discoveries at Bohai Bay BZ 28-2 E and KL 20-1 and completed successful appraisals for both.

Also yesterday, CNOOC reported total net production from the first quarter reached 473,280 BOE per day, up 5.1 percent year-on-year.

In first quarter of 2007, CNOOC's net gas production increased by 41.1 percent year-on-year to 550 million cubic feet per day, mainly from production at the North West Shelf Project in Australia and Southeast Sumatra Gas Project in Indonesia, according to Yang.

The company's unaudited revenue, however, dropped 10.9 percent year-on-year to 14,851 million yuan for the first quarter of 2007, due to downward fluctuation of global oil price.

Liu Gu, a veteran analyst with Shenzhen-based Guotai Jun'an Securities (Hong Kong) Ltd, forecasts lower net earnings for CNOOC this year, because of the flat global price of oil and the company's high exploration expenditure.