CNOOC fires up Wenchang 9-7 platform, kicking off production in South China Sea

CNOOC Limited has commenced production at the Wenchang 9-7 Oilfield Development Project, setting a new benchmark for sustainable offshore energy development in China. Located in the western sector of the Pearl River Mouth Basin, this strategic project is positioned in approximately 120 metres of water and is designed to tackle the dual challenges of low-permeability reservoir extraction and environmental sustainability. The project introduces the country’s first offshore miscible gas flooding system, alongside a pioneering offshore Organic Rankine Cycle (ORC) unit for zero-flare power generation.

The state-backed company, which trades on both the Hong Kong and Shanghai stock exchanges under the tickers SEHK: 00883 and SSE: 600938 respectively, holds a 100% stake in the project. CNOOC Limited also operates the field, reinforcing its role as a technological leader in China’s push to modernise and decarbonise its upstream oil and gas portfolio.

Why is Wenchang 9-7 strategically significant to China’s energy ambitions?

The Wenchang 9-7 field lies within the Pearl River Mouth Basin, one of China’s key offshore hydrocarbon zones in the South China Sea. This region has grown increasingly vital to national energy planning as onshore fields mature and energy security becomes a more pressing issue. With a target plateau output of 12,000 barrels of oil equivalent per day (boe/d) by 2027, the light crude extracted from this field will supplement CNOOC’s broader production mix and support China’s domestic supply goals.

This development forms part of a wider strategic shift in Chinese upstream operations toward the exploitation of more geologically complex and technically demanding reserves. Low-permeability fields such as Wenchang 9-7 have traditionally presented recovery challenges, but CNOOC’s adoption of enhanced oil recovery (EOR) technology reflects its efforts to maximise recovery efficiency while maintaining operational sustainability.

What innovative technologies are being deployed at Wenchang 9-7 to boost output?

CNOOC Limited is using miscible gas flooding as a core method to address the technical hurdles posed by low-permeability reservoirs. By injecting gas that mixes with the oil in the reservoir, this technique lowers the viscosity of trapped hydrocarbons, allowing more efficient flow and extraction. This innovation enables CNOOC to unlock reserves previously considered marginal or uneconomical, signalling a new frontier in offshore recovery techniques.

The development blueprint includes 25 wells—18 for production and 7 for gas injection—linked to a newly installed drilling and production platform. By integrating these wells with nearby existing infrastructure, CNOOC has managed to keep capital expenditures optimised while enhancing field connectivity.

How is CNOOC leveraging zero-flaring and ORC power to reduce emissions?

Sustainability is at the heart of the Wenchang 9-7 development. The field boasts a “zero flaring” milestone, achieved by building an interlinked gas pipeline network that collects and reuses all associated gas. Waste heat from operations is not only recovered but converted into power using a high-temperature 5MW offshore Organic Rankine Cycle (ORC) power unit—claimed to be the first of its kind installed offshore globally.

This ORC system is designed to produce up to 40 million kilowatt-hours of electricity annually, significantly reducing reliance on diesel-powered generation. More importantly, the system is expected to cut carbon dioxide emissions by approximately 33,000 metric tons per year, helping the company align with China’s 2060 carbon neutrality goals and meet growing environmental expectations from regulators and global investors alike.

How does the Wenchang 9-7 oilfield tie into CNOOC’s broader ESG roadmap?

Earlier this month, CNOOC Limited released its 2024 Environmental, Social and Governance (ESG) Report, underscoring its commitment to high-quality development, environmental stewardship, and social responsibility. The report highlights key achievements including its inclusion in the Fortune China ESG Impact List, reflecting capital market recognition of its governance practices.

In 2024, CNOOC implemented 18 energy-saving retrofits that cut carbon emissions by nearly 590,000 metric tons. Green energy milestones included the launch of Wushi 23-5, China’s first offshore oilfield designed with sustainability at its core, and the full operation of all three phases of the Bohai onshore power integration. The company also made progress on floating offshore wind projects and carbon capture initiatives in Bohai and Hainan, while expanding its use of intelligent automation in platforms like “Shenhai-1.”

On the social front, CNOOC carried out around 30 ecological restoration projects and continued its community co-development initiatives, including an award-winning local talent programme in Uganda. In total, the company created over 22,000 jobs globally in 2024 and allocated RMB133.12 million to public welfare, with RMB83 million directed toward rural revitalisation.

What is the current investor sentiment and stock performance for CNOOC?

CNOOC Limited’s advancements at Wenchang 9-7 and broader ESG performance come at a time when the company’s stock is experiencing a phase of recalibration. As of April 10, 2025, shares on the Hong Kong Stock Exchange (SEHK: 00883) closed at HK$15.94, down roughly 13.4% over the last ten trading days. Meanwhile, the stock on the Shanghai Stock Exchange (SSE: 600938) closed at CNY 24.24, marking a 4.9% weekly decline.

Despite this recent volatility, the analyst consensus remains bullish. Out of 18 analysts covering the stock, 16 maintain a “Buy” rating, with a 12-month average price target of HK$22.01—indicating an upside potential of nearly 36%. On the Shanghai bourse, the price target ranges between CNY 27.90 and CNY 37.50, with an average of CNY 32.37.

However, technical indicators suggest a cautious short-term outlook. The stock is currently in a downward trend, with bearish signals on both MACD and moving averages. A key support level lies at HK$15.62, with resistance at HK$16.14, and a further breach below support could lead to continued selling pressure.

That said, CNOOC’s appeal for long-term investors remains strong. With a dividend yield of approximately 6.9% and a payout ratio of 44%, the stock is well-positioned for income-focused portfolios. Its consistent dividends, strong cash flows, and low carbon innovations offer a compelling risk-adjusted profile as energy markets evolve.

Investment Outlook: Buy, Hold, or Sell?

Long-term investors may view CNOOC Limited as a favourable “Buy” opportunity, especially given its strategic production expansion, pioneering green technologies at Wenchang 9-7, and strong dividend yield. However, short-term traders should remain cautious due to prevailing technical weaknesses. A “Hold” may be advisable for current shareholders awaiting a rebound, while potential entrants should monitor technical thresholds closely before initiating new positions.