CNOOC Ltd, China's third-largest oil producer, said first-half profit soared 69 percent as the nation's economic expansion increased demand and international prices for the fuel climbed to all-time highs.

Net income rose to a record 11.8 billion yuan (US$1.5 billion), or 0.29 yuan a share, from 7 billion yuan, or 0.17 yuan, a year earlier, the company said in a statement in Hong Kong yesterday.

Oil companies' profits are soaring as demand from China and output disruptions pushed prices up 61 percent in a year. The gains may prompt CNOOC Chairman Fu Chengyu to bid for another producer after his US$18.5 billion bid for Unocal Corp failed.

"Any rise in global oil prices increases their earnings substantially," said Agnes Deng, who helps manages US$1.2 billion including Chinese oil stocks at Standard Life Investments Asia in Hong Kong. "Acquisitions will be a strategy to help it grow profit and better enjoy the rising prices."

China's dominant offshore oil and gas producer increased earnings at a faster pace than rivals PetroChina Co and China Petroleum & Chemical Corp, whose gains from surging crude oil prices were eroded by a slump in refining profits.

CNOOC will pay a first-half dividend of 5 Hong Kong cents a share plus a special dividend of another 5 cents. First-half oil and gas revenue rose 54 percent to 24.73 billion yuan, as production gained 15 percent to 420,325 barrels of oil equivalent a day. Average oil output gained 16.3 percent to 356,826 barrels a day. CNOOC's average oil price rose 36 percent to US$43.91 a barrel.

The company said it made four new oil discoveries in the first half. Capital expenditure was 7.64 billion yuan, including 860 million yuan on exploration.

Oil in New York reached a record US$70.80 a barrel on Monday in electronic after-hours trading on the New York Mercantile Exchange.

Shares of CNOOC have risen 38 percent in Hong Kong this year, more than the 4.9 percent gain in the benchmark Hang Seng index, because of the boost to profit investors expect from higher oil and gas prices.

The stock advanced 5 Hong Kong cents, or 0.9 percent, to HK$5.75 yesterday.

CNOOC may still fail to make the most of record energy prices because of delays in developing what is expected to be the largest field off China's coast. In February, the company cut its production growth forecast starting in 2006 until 2010.

Output may increase by between 7 percent and 11 percent a year during the period, down from an earlier range of between 8 percent and 12 percent, Fu said in Hong Kong on February 2. A project off northeastern China, estimated to contain larger reserves than any of CNOOC's other fields, won't reach full capacity until 2012, two years later than expected, he said.

(China Daily August 31, 2005)