China Oilfield Services Buys Rig to Expand Deepwater Exploration Capacity

China Oilfield Services Ltd. (2883.HK), the drilling arm of China National Offshore Oil Corp., said late Tuesday that it has bought a secondhand deepwater semi-submersible rig in a move to expand its deepwater drilling capacity to support its parent company's ambitious oil and gas growth targets.

The Beijing-based company didn't provide any financial details on the deal but said the rig can operate at a depth of 4,600 feet and is expected to start drilling operations offshore China by the end of this year.

China Oilfield Services is the leading oil field services provider in the offshore Chinese market. Most of the company's rigs have been used for oil and gas discoveries made by Cnooc Ltd. (CEO), a subsidiary of China National Offshore Oil Corp., or by foreign operators through Cnooc Ltd.'s profit-sharing contracts.

As part of efforts to locate more domestic oil and gas reserves, Cnooc Ltd. has taken steps to become independent in deepwater exploration and production after previously relying on foreign skills and technology. Cnooc Ltd. in May started operating its first deepwater semi-submersible drilling rig, HYSY 981, which is capable of drilling to a depth of 3,000 meters.

With slower oil and gas output growth after 2010, Cnooc Ltd. needs to develop remote deep-sea areas to help feed China's heavy energy demand.

Cnooc Ltd. has targeted its oil and gas output to grow at a compound annual rate of 6%-10% between 2011 and 2015, down slightly from 7%-11% for 2005-2010.

(Foxbusiness, Edited by Topco)