CNOOC Limited, an arm of China's dominant producer of offshore oil and natural gas China National Offshore Oil Corporation (CNOOC), announced yesterday that its net profit in 2004 reached a historic high thanks to oil prices soaring to all-time highs.

The net profit of the Hong Kong and New York listed company surged 40.3 per cent to 16.19 billion yuan (US$1.96 billion).

Oil and gas revenues rose 31.2 per cent to 36.89 billion (US$4.46 billion) and the company produced 140 million barrels of oil equivalent (BOE) in 2004, representing an increase of 7.5 per cent year-on-year.

"We realized a record profit and achieved a remarkable growth in oil and gas production and reserves in 2004," said company Chairman and Chief Executive Officer Fu Chengyu.

"The extraordinary profit is primarily due to high commodity prices and an increase in production volumes."

Fu added that the company plans to produce 160-165 million barrels of oil and gas this year and newly commenced oil and gas projects in coastal areas will contribute an additional 19 per cent rise in production.

The company's exploration activities in six development projects in 2004 resulted in five discoveries, Fu said.

The company's net proven reserves totalled approximately 2.2 billion BOE at the end of last year.

The persistent rise in production costs has been pressuring the company's profitability. According to President Zhou Shouwei, the production cost per barrel increased by 6.6 per cent to US$11.81 last year.

"The cost per BOE this year will be between US$12.02-12.40 per barrel, marking an increase of 1.8-5 per cent in costs," Fu estimated.

The company declared a total dividend of HK$0.16 per share, representing a 43.2 per cent payout of the 2004 net profit.

Chief Financial Officer and Senior Vice-President Yang Hua stressed: "We will further develop the company's ability of organic growth."

CNOOC shares lost 0.58 per cent falling to HK$4.25 before the results were announced yesterday.

Editor: Olivia