CNOOC 1H profit up 51 pct, says sorry for spill

[August 24, 2011]  SHANGHAI (AP) -- Chinese offshore oil and gas producer CNOOC Ltd. said Wednesday that rising output and higher prices helped boost its profit by 51 percent in the first half of the year.

Meanwhile, the Beijing-based company apologized for oil spills in China's Bohai Bay linked to an oilfield operated by partner ConocoPhillips.

"The Bohai Bay oil spill incident has sounded the alarm: safety and environmental risks are ever present, and we could never be too aware of the crisis and our responsibility," CNOOC's chairman Wang Yilin said in a statement.

State-run CNOOC has said relatively little about the spills, deferring to ConocoPhillips as operator of the wells in the affected Penglai 19-3 oilfield. The U.S. oil company is facing possible legal action and widespread criticism for the spills that began in June and are due to be cleaned up by the month's end, though it says damage to the environment has been minimal.

CNOOC, or China National Offshore Oil Corp., said its output rose 13 percent in the first half of the year from a year earlier to 168.7 million barrels of oil equivalent. Its net profit was 39.3 billion yuan ($6.1 billion).

CNOOC, which has no major refining operations, relies mainly on oil production for its profits. During the first half of the year, it benefited from a surge in crude oil prices. But prices have fallen back to about $85 a barrel from a peak of $115 a barrel in May, on expectations a weaker U.S. economy may sap demand.

The company's average realized oil price was US$108.16 per barrel in January-June, nearly 41 percent higher than the same period a year earlier. Its gas price rose 15.5 percent, CNOOC said.

CNOOC acknowledged concern over dwindling resources within oil-scarce China and said it would continue to expanding its overseas assets, including in shale oil and gas and oil sands.

"We believe the cost of unconventional energy will come down and play a more important role in world energy supply following technology breakthroughs in the future," it said.

CNOOC said the oil spills in Bohai, which began in June and covered 840 square kilometers (324 square miles), were a severe accident.

"We all deeply regret this," it said. "We truly realized that the company needs to constantly improve and enhance its health, safety and environment management along with its rapid development."

Over the weekend, the government said nine oil leak sites were spotted, but ConocoPhillips said it believed the seeps were not new.

The oil spills have deepened concern over the marine environment in the Bohai, a major fisheries region off China's northeast coast that already is suffering heavy pollution from industry and agriculture. ConocoPhillips said its tests of oil particles collected from shorelines found that almost all were from fuel oil.

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Online:

CNOOC: http://www.cnoocltd.com/

[Associated Press; By ELAINE KURTENBACH]

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