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Energy

CNOOC eyes $29bn Qatar LNG project to aid Xi's CO2 target

Chinese state-owned oil major 'very interested' in joining venture

Cultivating new sources of natural gas has become CNOOC's strategic imperative since President Xi Jinping openly pledged last September that the country will go carbon neutral by 2060.   © Reuters

HONG KONG -- CNOOC, the Hong Kong-listed arm of one of China's three major state-owned oil and gas producers, indicated keen interest Thursday in joining a Qatari liquefied natural gas project that ranks as the world's largest.

Chief Financial Officer Xie Weizhi told reporters at an online quarterly performance briefing that the Chinese company is "of course, very interested in the investment opportunity in Qatar."

He was referring to the $29 billion North Field East Project, designed to raise the Middle Eastern country's annual LNG production capacity to 110 million tons by 2025 from 77 million currently. The investment decision will be made this year, according to Saad bin Sherida al-Kaabi, Qatar's energy minister.

Xie stressed that he had "no news on the progress to disclose at this point," but immediately followed up by saying the company is "definitely interested" in the project. He did not forget to praise Qatar as an "important LNG producer that we are proactively pursuing for investment opportunity."

Cultivating new sources of natural gas has become CNOOC's strategic imperative since President Xi Jinping openly pledged last September that the country will go carbon neutral by 2060.

The country's two other state-owned oil companies -- PetroChina and China Petroleum & Chemical, better known as Sinopec -- are seeking other clean energy options such as hydrogen, given their wider business portfolio. CNOOC has focused on increasing natural gas production and wind power output, as it owns far more maritime oil and gas assets than its two peers.

CNOOC wants natural gas to account for over 30% of its production in 2025, up from 19% now. Xie said this effort will focus on developing domestic sources, namely in the Bohai Sea and the South China Sea, where Beijing claims Chinese sovereignty.

But the company also has a team dedicated to finding projects abroad, especially "in the context of energy transition," he said.

Xie said that all overseas projects must meet a "very explicit internal guideline" on investment returns, but noted that North Field East may pose no problem on this front.

Saying that "it is not something we have disclosed to the market in the past and therefore it is not convenient to talk about it," Xie revealed that CNOOC has a strict formula on investment risk premium for each country in which the company considers making an investment.

Matthieu Bouyer, Qatar chief for French energy major Total, also indicated strong interest in North Field East, in an interview published last week by the Gulf Times.

The onshore engineering, procurement, construction and commissioning contract for the project went to Japanese engineering group Chiyoda and Technip Energies, a French counterpart, in February. This portion, awarded by state-owned energy company Qatar Petroleum, was worth $13 billion.

CNOOC apparently performed strongly in the first quarter, though the listed company did not disclose quarterly profit. The unlisted parent, which shares the same acronym, reported at an internal meeting April 15 that it achieved the highest first-quarter profit in seven years.

Xie said they are two different companies, but that the results are "on the whole consistent." He went ahead and attributed a positive first-quarter result for the listed unit to three factors: higher oil prices, higher production levels and a favorable production mix, in which domestic sites yielding higher profits fared better than those overseas.

But the online press event, which lasted a bit short of half an hour, left out at least two important topics.

Xie did not discuss the company's pending delisting from the New York Stock Exchange, a move based on an executive order from the White House in 2020 that affects multiple Chinese businesses. CNOOC seeks a review to remain on the exchange.

CNOOC also gave no update on the well blowout and fire at a platform for its Pengbo Operating Co. on April 5, which left three people missing at the time of the initial announcement four days later.

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