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China National Offshore Oil Corporation, the parent company of CNOOC Ltd. (CEO - Analyst Report), said that its production at its northern part of Bohai Bay has been affected by icy weather conditions.
CNOOC said that extremely harsh weather conditions resulted in frozen coastal waters and fence in 1,000 ships in ice. North China is experiencing the coldest winter in 42 years, with temperatures dropping to minus 7.4 degrees Celsius. China’s meteorological department also warned of continuous severe winter to prevail in February.
Although CNOOC and China Oilfield Services (COSL) have arranged 13 ice breakers and have installed radar equipment and also employed people to check the varying conditions in the region, icy conditions have adversely affected the producing areas of the Jinzhou 9-3 oilfield and the Jinzhou 20-2 gas field. Presently, the ice breakers are operating in the Jinzhou 25-1, Jinzhou 25-1 South and Suizhong 36-1 oilfields.
China's northern Bohai Bay is considered the largest offshore oil and gas production base of the company. CNOOC stated last month that its oil and gas production in the region exceeded 30 million cubic meters in 2012.
However, CNOOC also said that it failed to bring new fields online in Bohai. Penglai 19-3 - the biggest offshore oilfield - was also shut down following a series of oil spills in 2011.
CNOOC’s growth profile should get a boost over the next 3 to 5 years from the resumption of operations in Penglai, development projects offshore China, international growth from recent acquisitions, as well as intensive exploration and development programs with its partners.
CNOOC, which recently inked a deal to purchase Canadian energy producer Nexen Inc. , retains a Zacks #1 Rank that is equivalent to a short-term Strong Buy rating.