CNOOC Commits to H2 Output Push After Record Interim Production
CNOOC posted first-half records at $29.7 per barrel all-in cost and vowed to lift output in H2, adding to supply pressure as ICE Brent front-month sits at $88.
CNOOC said on Friday (2026-08-28) that it would "spare no effort" to build reserves and lift output through the second half of the year, a pledge anchored by first-half results the company described as records on both production and revenue for any interim period in its history.7
The numbers give the pledge credibility. Net production in Q1 2026 reached 205.1 million barrels of oil equivalent, up 8.6 percent year on year and the highest the company had posted for any opening quarter, according to Rigzone's reporting on the company's disclosures. Quarterly oil and gas sales revenue came in at approximately RMB97 billion ($14.4 billion), up 9.9 percent year on year. Capital expenditure for the quarter reached approximately RMB33.02 billion ($4.9 billion), driven by accelerated exploration deployment.7
International assets are growing faster than the domestic base. Overseas net production rose 12.3 percent year on year to 65.1 million barrels of oil equivalent in Q1 2026, with CNOOC attributing the gain to output from the Kenli 10-2 oilfield cluster in the south Bohai Sea and the Yellowtail Project. Full production from Kenli 10-2 phase one began in late May (2026-05-27); the cluster now yields more than 20,500 barrels per day of crude oil.7,2
Cost economics are straightforward at current prices. All-in costs held at $29.7 per barrel of oil equivalent, CNOOC reported. ICE Brent crude front-month was recorded at $88.29 per barrel as of August 29, a spread that comfortably supports further expansion without straining project returns.7
The CNOOC results are the freshest data point in a longer run of Chinese supply growth. National oil and gas production hit historic highs across 2025, China Daily reported, as the state majors pushed to reduce import exposure. Sinopec's Jiyang shale oil base in Shandong province has separately ramped up output in recent months, with the company deploying a depolymerization technology to accelerate extraction from a previously constrained formation, according to OilPrice.com.5,1
Sinopec's own quarterly report from August 24 (2026-08-24) provides pricing context. The average spot price of Platts Brent in Q2 2026 was USD92.6 per barrel, up 29.1 percent year on year. But the demand side of China's gas market is softening: Sinopec's statistics show domestic natural gas consumption up just 1.6 percent year on year in the same period, a deceleration that weighs on gas-focused revenue assumptions heading into H2.6
The gap in strategic buffer stocks between Beijing and Washington runs in China's favour. Steve Hanke noted that China's petroleum reserves stand at nearly five times the size of the US Strategic Petroleum Reserve, which has declined to a more than 40-year low of 304.81 million barrels. A deeper reserve cushion reduces Beijing's vulnerability to market disruption at a time when US buffer capacity is near its lowest point in decades.4
Further supply is coming from outside China. The UAE has lifted output to approximately 3.8 million barrels per day since exiting OPEC, the highest since April 2020 per Cryptobriefing, compounding the supply-side weight already building from rising Chinese domestic production.3
Prediction markets are not pricing an upside breakout. The probability of crude oil reaching a fresh all-time high by September 30 sits at 2.6 percent, with the December 31 deadline showing a modestly higher probability of 7.5 percent, according to market data cited by Cryptobriefing. WTI crude front-month was recorded at $83.44 per barrel as of August 29, well short of record territory.3
The key near-term test is whether CNOOC's H2 acceleration translates into barrels at prices that have eased below the Q2 2026 Platts Brent average of $92.6 per barrel, with Kenli 10-2 output rates and Sinopec's Shandong shale expansion as the clearest operational indicators to watch.7,6,1