BEIJING, Dec 25 - China offshore oil specialist CNOOC Ltd (0883.HK) is reevaluating its operational activities and is likely to scale down or delay some projects as slumping oil prices threaten to invalidate its previous oil economics, a company source said on Thursday.
Oil prices CLc1 have nosedived after hitting a record above $147 a barrel in July, ending several years of rally as the global financial crisis spreads and economic recession deepens.
"We are doing the accounting again," said the source who was involved in the work. "There is a chance that some projects under construction or in the pipeline could be delayed or slowed due to the price slump."
"But those fields in production would not be affected," said the source, who declined to be named due to company policy.
CNOOC's long-term reserves and production growth prospects could be jeopardised if crude oil prices were to fall further, Andrew Chan, an analyst with Daiwa Institute of Research said in a note late last month.
CNOOC Chairman Fu Chengyu said on Nov. 7 that oil prices around $60 a barrel and $147 were both illogical and the firm could begin to feel more pressure if the economic crisis continued worsening.
Thanks to high oil prices, CNOOC Ltd (CEO.N) saw its revenue soar 69 percent in the third quarter despite its crude oil output increasing only 15.2 percent during the same period.
It plans to step up deepwater exploration in the South China Sea from 2009 and to invest 200 billion yuan ($29.3 billion) until the end of the next decade, in part beefed up by its bulging coffers and fast acquisition of deepwater know-how.
The source declined to say how much investment might be reduced or rolled back if oil prices stayed at current levels around $40 for the longer term, but said oil prices were still ahead of the total cost for extracting a barrel of oil.
"Sinking oil prices in one way did cut into our revenue, but on the other hand provided cheaper merger and acquisition opportunities abroad," said the source.
A company spokesman was not available for comment. ($1=6.833 Yuan)
Oil prices CLc1 have nosedived after hitting a record above $147 a barrel in July, ending several years of rally as the global financial crisis spreads and economic recession deepens.
"We are doing the accounting again," said the source who was involved in the work. "There is a chance that some projects under construction or in the pipeline could be delayed or slowed due to the price slump."
"But those fields in production would not be affected," said the source, who declined to be named due to company policy.
CNOOC's long-term reserves and production growth prospects could be jeopardised if crude oil prices were to fall further, Andrew Chan, an analyst with Daiwa Institute of Research said in a note late last month.
CNOOC Chairman Fu Chengyu said on Nov. 7 that oil prices around $60 a barrel and $147 were both illogical and the firm could begin to feel more pressure if the economic crisis continued worsening.
Thanks to high oil prices, CNOOC Ltd (CEO.N) saw its revenue soar 69 percent in the third quarter despite its crude oil output increasing only 15.2 percent during the same period.
It plans to step up deepwater exploration in the South China Sea from 2009 and to invest 200 billion yuan ($29.3 billion) until the end of the next decade, in part beefed up by its bulging coffers and fast acquisition of deepwater know-how.
The source declined to say how much investment might be reduced or rolled back if oil prices stayed at current levels around $40 for the longer term, but said oil prices were still ahead of the total cost for extracting a barrel of oil.
"Sinking oil prices in one way did cut into our revenue, but on the other hand provided cheaper merger and acquisition opportunities abroad," said the source.
A company spokesman was not available for comment. ($1=6.833 Yuan)
