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Eric Ng

China National Offshore Oil Corp, the parent of listed CNOOC, plans to raise up to 80 billion yuan (HK$90.87 billion) to finance major expansion by issuing mid-term corporate bonds by March 2011.
Registration of the bond issue by the nation's dominant producer of offshore oil and gas had been accepted by the National Association of Financial Market Institutional Investors, said the association, a voluntary and self-regulating industry organisation monitored by the mainland's central bank.
China National Offshore has until March 12, 2011 to issue the bonds, which will be underwritten by Industrial and Commercial Bank of China and Bank of Communications. 
The bonds would be issued in tranches, with the first  to be completed within two months from the registration acceptance date of March 12, the association said.
Reuters quoted China National Offshore chief accountant Wu Mengfei as saying in an industry conference in Beijing yesterday that the planned fund-raising would help speed up construction on a number of exploration projects, and take advantage of declining material costs.
President Fu Chengyu said early this month that the company had budgeted US$16.5 billion of capital expenditure for this year, 26 per cent more than last year. 
Listed CNOOC, which owns all of the group's oil and gas exploration and production assets, said in January it planned total exploration and resource development expenditure of US$6.76 billion this year, up 19 per cent from US$5.68 billion last year. 
China National Offshore, which besides CNOOC also owns downstream oil refining, petrochemicals and fertilisers production, as well as liquefied natural gas (LNG) import and distribution operations, plans to start building this year phase two of a refinery and an associated petrochemical plant in Huizhou, Guangdong.
Together they are expected to cost some 45 billion yuan and completion is expected in 2011.
Phase one of the wholly owned refinery has the capacity to process 12 million tonnes of crude oil a year. The second  phase will raise that to 22 million tonnes. 
China National Offshore already has a 50-50 joint venture with global energy giant Royal Dutch/Shell on a petrochemical plant in Huizhou that is capable of churning out annually 800,000 tonnes of key chemical building block ethylene. 
China National Offshore will separately build a wholly owned petrochemical plant with annual ethylene capacity of 1 million tonnes a year. 
By integrating the operation of its refinery and the petrochemical plant, it can cut operating costs and enhance project returns. 
It is not clear whether China National Offshore's US$16.5 billion spending budget for this year includes possible oil and gas resource acquisition. Mr Wu said it was vetting many acquisition proposals. 
'After our [failed] attempt to acquire [US oil firm] Unocal [in 2005] everyone knows CNOOC, and knows that CNOOC is a good buyer,' he was quoted by Reuters as saying. 'We receive letters every day from people trying to sell something to us.'
Spending big 
China National Offshore budgets US$16.5 billion for capital expenditure  
CNOOC's capital expenditure is expected to rise this year by: 26%



CNOOC parent bond to raise 80b yuan for rapid expansion