Singapore (Platts)--16Jan2013/521 am EST/1021 GMT

State-owned China National Offshore Oil Corp is likely to see slower growth in production this year though capacity expansions should spike from 2014 hiking output again, analysts at Bernstein Research said in a research note on Wednesday.

The bank expects CNOOC's production to have reached 340 million barrels of oil equivalent (929,000 boe/d) in 2012, up just 2.2% year on year.

The slow growth is likely to continue this year, with output forecast at 350 million boe, representing a 3.2% year-on-year growth, according to Bernstein.

This is because the close of the Nexen acquisition has slipped to the current quarter from the end of last year. CNOOC said it now expects to gain all regulatory approvals for the deal by the end of the first quarter, which should see a consolidation of Nexen assets from the start of Q2.

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In addition, production levels at the Penglai 19-3 field offshore China in the Bohai Bay are likely to be maintained at 95,000 b/d for the year, lower than its original output of more than 120,000 b/d in 2011.

The National Development and Reform Commission approved the field's revised development plan in December, paving the way for an official restart. It had been shut since September 2011 -- when it was producing 122,000 b/d -- following oil spills at the Bohai Bay but was partially restarted from Q1 2012 to relieve reservoir pressure.

CNOOC has 51% of Penglai 19-3, alongside operator ConocoPhillips (49%), which said it was producing 45,000 b/d at the end of Q3 2012, suggesting gross production was nearly 92,000 b/d.

"NDRC has recently given the green light to restart the field. While this news may be positive, it does not change [the] production outlook for 2013 ... We believe that production levels are likely to stay at that level for 2013, meaning that most of the benefit for CNOOC from the restart has already happened," Bernstein said in its report.

Production growth should pick up and reach double digits in 2014-2015, however, as CNOOC has more than 30 projects under development and these will start up in the next three years, Bernstein said. This means the company is still likely to meet its target of 6-10% compounded annual production growth between 2011 and 2015.

"We expect Q4 of 2013 will mark the start of a multi-year growth cycle for CNOOC," Bernstein said.

CNOOC is aggressively investing to shore up production at existing ageing fields, which it calls "adjustment projects." The giant Liwan gas field in the South China Sea, operated by Canada's Husky Energy and in which CNOOC has a 51% stake, is also expected to come on stream in early 2014, peaking at 540,000 Mcf/day by 2015.

As a result, CNOOC's total production could grow by 15% and 13%, respectively, in 2014 and 2015, Bernstein said.

CNOOC will unveil its 2013 production forecast at a strategy preview later this month, while its full-year results for 2012 will be announced in March.

--Song Yen Ling, yen_ling_song@platts.com
--Edited by E Shailaja Nair, shailaja_nair@platts.com

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