Why investors are shrugging off CNOOC’s big offshore gas find in northeast China
- The discovery is the biggest by a Chinese energy giant in Bohai Bay in half a century
- But not all of the reserve will be tapped and it will take years of investment to determine the amount of reserve that can be economically pumped
CNOOC, China’s dominant offshore oil and gas producer, has made a major natural gas discovery off the northeast Bohai Bay but investors were not moved as it will take years to be brought to market and the reserve is not big enough to move the needle on China’s rising reliance on foreign gas.
A “high-quality and high-yield” hydrocarbon flow has been found at the Bozhong 19-6 exploration area by CNOOC, China Central Television reported on Monday, reflecting the first public announcement of the hydrocarbon deposit.
With an estimated geological reserve of 100 billion cubic feet, the field could meet demand of a million urban residents for a century, it said. The gas reservoirs are currently under evaluation and will proceed to the utilisation stage when all tests are completed.
But according to analysts, not all of the reserve will be tapped and it will take years of investment to ascertain the amount of reserve that can be economically pumped. The discovery is the biggest by a Chinese energy giant in Bohai Bay in half a century.
“For a gas reservoir of this scale, typically 50 to 70 per cent of the geological reserve can be economically produced,” said Neil Beveridge, a senior analyst at Sanford Bernstein.