China's CNOOC Ltd indicated a renewed commitment to oil and gas exploration on Tuesday as its chairman said it would raise spending to a record while signing strategic exploration agreements with nine firms for the South China Sea.
The strategic agreements cover Blocks A and B in the Pearl River Mouth Basin in the northern section of the South China Sea, offshore Guangdong province.
The nine firms involved include Chevron Corp, ConocoPhillips, Equinor, Husky Energy Inc, Kuwait Foreign Petroleum Exploration Co, Australia's Roc Oil, Royal Dutch Shell, SK Innovation and Total.
All of these firms have existing exploration and production operations in China.
The agreements follow increased efforts by China's state oil and gas producers PetroChina, Sinopec Corp and CNOOC to boost domestic oil and gas drilling, after a call by President Xi Jinping to boost domestic energy supply security.
The strategic cooperation agreements cover mostly geologically challenging ultra-deepwater, high pressure or low permeability reservoirs, Wood Mackenzie Analyst Andrew Harwood said in a note on Wednesday.
"Should these Strategic Cooperation Agreements progress into full exploration contracts, CNOOC will retain operatorship," said Harwood, adding that the basin is believed to hold significant deepwater gas and shallow water oil potential.
The comments on the increased spending came from CNOOC Chairman Yang Hua at a company event in Beijing on Tuesday where the agreements were announced.
"Currently the central government highly values oil and gas exploration and development and gave special directions," Yang said, though he did not give details on the amount to be spent.
Yang said the government is likely to give favorable policies to oil companies to support their offshore oil and gas exploration.
Central government officials have met recently with executives from China's three state-owned oil majors - PetroChina, Sinopec and CNOOC - to discuss plans to boost China's crude oil and natural gas output, Yuan Guangyu, vice president of the CNOOC group said on the sidelines of the event.
(Reporting by Meng Meng and Chen Aizhu; Writing by Florence Tan; Editing by Tom Hogue and Christian Schmollinger)