CHINA National Offshore Oil Corporation (CNOOC) plans to reduce its capital expenditure for 2016 to no more than RMB 60 billion, while its production target is also set to fall.

Speaking at the company’s 2016 strategy preview, company chief financial officer Zhong Hua said CNOOC expected to produce between 470 million and 485 million barrels of oil equivalent (MMboe) in 2016 – of which 82 per cent would be oil and the remainder natural gas.

“We proactively adjusted our 2016 production target based on the current environment to reflect our commitment to return,” he said.

“Four new projects are scheduled to come onstream within the year… The company currently has 20 projects under construction that are expected to contribute to production in the new year.”

CNOOC later announced that one of these, the wholly-owned Kenli 10-4 oilfield located south of Bohai, had started production from six wells, producing a total of about 6,540 barrels of crude oil per day.

The oilfield is expected to reach its overall development plan (ODP) designed peak production of about 9,600 barrels of crude oil per day in 2016.

Mr Zhong said CNOOC would spend RMB 11.4 billion on exploration, the bulk of offshore China, with about 115 exploration wells to be drilled in 2016.

“We plan to drill around 115 exploration wells during the year,” he said.

“We will also continue our seismic program and expect to acquire 10,000 km of 2D seismic data and 14,000 square kilometres of 3D seismic data.”

“Our exploration program will strengthen value-driven exploration philosophy, targeting mid-to-large discoveries, and cautiously reducing investment in high risk/high cost wells.”

CNOOC would spend roughly RMB 38.1 billion on development expenses and about RMB 7.9 billion on production maintenance expenses.

Mr Zhong said the company would be adjusting its three  year production target to reflect changes in the operating environment, with low oil prices having placed “tremendous pressure” on the industry and the CNOOC itself.

“We expect to see stable production in the next 3 years with 2017 and 2018 reaching approximately 484 MMboe and 502 MMboe respectively,” he said.