(Bloomberg) – CNOOC Ltd., China’s biggest offshore driller of crude oil, saw profits fall in the first quarter after a drop in global prices.
The energy giant reported a 7.9% decline in net income to 36.56 billion yuan ($5.03 billion) after revenue fell 4.1% to 106.85 billion yuan, according to a statement on Tuesday.
CNOOC has led Beijing’s efforts to boost oil and gas output and bolster energy security, and its focus on extraction helped deliver near-record annual profits last year. But that dependence on upstream prices was a burden in the first quarter.
The average price of Brent dropped about 8% compared to the first three months of 2024, due to escalating trade tensions and slower consumption growth, which is expected to persist through 2026. While CNOOC’s revenue from oil sales fell 4.6% over the period, sales of gas fared better with a 16% increase.
The trade war with the U.S. is likely to increase market volatility in the short-term, President Yan Hongtao told a briefing after the earnings were released. But the fallout from lower oil prices could also create acquisition opportunities, he said.
Pivoting focus to gas
The firm’s production rose 4.8% to 188.8 million barrels of oil equivalent over the quarter, just shy of its scaled-back targets for the year. Output from Chinese fields rose 6.2% to 130.8 million barrels, while overseas gains lagged as the company shifts its international mix, selling assets in the US Gulf and strengthening its position in South America and Indonesia.
China’s drillers are increasingly pivoting to gas to raise production, as demand for oil slows and global trade tensions heighten the risks of relying too heavily on imports. For its part, CNOOC said it expects new domestic wells to drive gas output growth through 2030.
Along with its Chinese peers, CNOOC is also expanding in petrochemicals, to help offset the impact of the energy transition on fuel demand as well secure the country’s supply of high-end materials.
CNOOC earnings follow a 25% slump in profits reported by Sinopec on Monday due weaker fuel demand and continued losses at its chemicals unit. PetroChina Co., the country’s biggest oil and gas firm, reported a modest rise in net income on Tuesday.
