Weak international oil prices are expected to knock about 78 per cent off the net profit of China National Offshore Oil Corp this year, vice-president Wei Liucheng said yesterday. The rate of decline is larger than the 30 per cent forecast several months ago. The company is awaiting approval to issue more than 300 million A shares which it hoped could raise about two billion yuan (about HK$1.86 billion) to fund a new oil exploration and production project in Bohai Bay. Mr Wei said the company was on track to post 700 million yuan or more in net profit this year, down from 3.2 billion yuan last year. This is despite a smaller 37-40 per cent decline expected in sales from $15 billion last year. Average international prices, at which the group sells its products, fell about 37 per cent in the first eight months to about US$13 a barrel. Mr Wei said: 'We should be able to slash production costs by between 10 and 15 per cent this year, otherwise it will be impossible for us to achieve our target of 700 million yuan.' The full-year forecasts would translate into a drop to a single-digit net profit margin from 21 per cent last year. 'There is a limit to which production costs can be reduced. If we have about four billion yuan less revenue this year and we could achieve more than 700 million yuan in profit instead of 800 million yuan loss, then you can see we have improved our efficiency,' he said. The company, which accounted for about one-tenth of the country's domestic crude output, produced 11.1 million tonnes of crude in the first eight months and expected to reach its full-year target of 16.5 million tonnes, up from about 16.28 million tonnes last year. Mr Wei said the A-share issue should not hamper the company's chances of seeking an overseas listing despite the introduction of policy this year that allows each enterprise to issue only one class of shares. Under the A share plan, an existing project in Bohai Bay would go public to raise funds to help finance part of the development cost of a recently discovered oilfield in the area.