A woman cycles past the CNOOC Ltd headquarters in Beijing. [Photo/ Bloomberg]

Firms discuss possible exploration agreement in South China Sea

HONG KONG - CNOOC Ltd and BP Plc are in talks on a production-sharing agreement in the South China Sea, the chief executive officer of China's biggest offshore energy explorer said.

"We are talking about it," Yang Hua said after a media briefing in Hong Kong on Wednesday, without giving details or saying if the parent company, or its listed unit, were involved in the negotiations.

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BP is close to signing a "major" exploration agreement with China National Offshore Oil Corp, CNOOC's parent, Sky News reported on Nov 6, citing unidentified people.

BP and the State-owned company would jointly explore in the South China Sea, according to Sky.

CNOOC, based in Beijing, said last month third-quarter revenue rose 64 percent as the company stepped up acquisitions and output to meet fuel demand in the world's fastest-growing major economy. The company has spent more than $4 billion so far this year on oil and gas assets in Argentina and North America.

The $1.08 billion acquisition of a stake in the Eagle Ford shale gas project in the United States is in line with the strategy of adding value to CNOOC, regardless of whether the assets are offshore or on land, Yang said after the briefing.

The shares have risen 41 percent this year in Hong Kong, compared with a 5.3 percent gain for the Hang Seng index. CNOOC advanced 0.4 percent to HK$17.16 ($2.21) on Wednesday. Twenty-one out of 33 analysts surveyed by Bloomberg rate the stock a "buy", while six rate it a "hold".

Overall production may reach 329 million barrels of oil equivalent this year, surpassing CNOOC's target of as much as 290 million. Output growth in the third quarter benefited from contributions from the Bohai Bay in Northeast China and overseas fields, Chief Financial Officer Zhong Hua said on Oct 28.

China's oil demand may rise to 11.63 million barrels a day by 2015 from 9.16 million barrels a day this year, according to the International Energy Agency.

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