CNOOC sees minimal output hit from China oil field fire

Market: Crude oil
09/04/21

China's state-controlled CNOOC expects a fire at one of its offshore platforms earlier this week to reduce crude production by around 600,000 bl this year.

A production platform at the company's Penglai fields in northeast China's Bohai bay was hit by a fire on 5 April after shallow gas overflowed during drilling operations, CNOOC said today in its first comment on the incident. Argus reported the fire yesterday.

The fire was extinguished on 6 April and there has been no oil spill or environmental pollution so far, CNOOC said. The company evacuated 99 of the 102 people on the platform at the time of the incident, and search operations are underway for the three missing workers.

The incident is likely to affect up to around 600,000 bl of production this year, which CNOOC estimated at 0.1pc of its total output. CNOOC has set a production target of 1.49mn-1.52mn b/d of oil equivalent (boe/d) this year. It produced 1.44mn boe/d in 2020, including 1.12mn b/d of liquids.

The fire hit the third wellhead platform at the Penglai 19-3 field's phase 3 operations, market participants said. CNOOC operates the field in a 51:49 joint venture with US independent ConocoPhillips.

ConocoPhillips also has a 49pc non-operating share in Penglai's 19-9 and 25-6 blocks, which together with the 19-3 field produced a combined 30,000 b/d in 2020. The heavy-sweet crude produced from the shallow-water Penglai fields is sold to CNOOC's refineries and to independent refiners in Shandong province.

An oil spill at the Penglai fields in 2011 resulted in CNOOC and ConocoPhillips paying several hundred million dollars in compensation.

By Kevin Foster

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