China’s CNOOC Ltd. ( CEO - Analyst Report ) is close to resuming production at its largest offshore oilfield, Penglai 19-3. The country’s biggest offshore oil and gas producer by capacity gets the Chinese government's top economic planning agency’s approval for the revised development plan for the aforesaid oil field in Block 11/05, as per China's National Energy Administration (NEA) report.

The National Development and Reform Commission of China has given the company consent for the revised second phase of the overall development plan for the oilfield in northern Bohai Bay following the oil spill incident that forced the plant to shut down in Sep 2011.

Penglai 19-3 oilfield is operated by a Chinese affiliate of the U.S. oil major ConocoPhillips ( COP - Analyst Report ) with a 49% stake. The field was jointly developed by CNOOC, which holds the remaining 51% interest.

In June 2011, a subsidiary of the U.S. oil major ConocoPhillips had experienced an oil spill in the Penglai 19-3 oilfield that caused environmental damage and polluted approximately 6,200 square kilometers of water. Both the companies have agreed to pay $266.89 million (1.683 billion yuan) to recompense for the incident.

Since Jul 13 ConocoPhillips was asked to stop production at platform B and C of the Penglai 19-3 oilfield as per the mandate of the State Oceanic Administration (SOA), which had considered the clean-up act to be slow.

The second phase of the plan was already accepted by the Chinese government way back in 2005. However, ConocoPhillips was still required to submit a revised plan last Nov owing to the spill incident. Armed with the latest approval of the revised plan, CNOOC reached a step closure to resuming production at Penglai. CNOOC still needs to go through other government agencies and meet other requirements to restart production.

The resumption of operations in Penglai post-spill along with 16 development projects in offshore China is expected to boost CNOOC’s long-term growth profile. This will be complemented by recent international acquisitions. The projects will likely be supported by extensive exploration and development programs with its partners over the next 3–5 years.

CNOOC currently retains a Zacks Rank #3 (short-term Hold rating).