This year, CNOOC also has signed a deal that could boost its future crude oil output. On July 7, China Oilfield Services Ltd. (COSL), one of the four listed companies under CNOOC, announced that it had reached an agreement with Awilco Offshore ASA (AWO), an Oslo-listed offshore drilling company, to acquire 100 percent of its shares for approximately NOK12.7 billion (approximately $2.5 billion) in cash. This is the largest overseas purchase of its kind in terms of transaction value, which has involved Chinese companies.

CNOOC entered into the deal mainly to get AWO's high-specification rigs. It wants to penetrate new seabeds that are 300-3,000 meters deep, where oil, gas and mineral resources are abundant. China has 700,000 square km of deep-sea areas with rich reserves of oil and natural gas. But because of insufficient technology, it cannot explore and exploit resources in most of these places. CNOOC could only explore and exploit deep seabeds up to 500 meters, while foreign countries can penetrate into seabeds that are 2,400-3,000 meters deep, said Li Qingping, chief engineer of the CNOOC Research Center, in an interview with China Business Post.

The exploration and exploitation of oil and gas in deep-sea areas require large and extremely expensive equipment, Li said. Because the rental costs for some drilling ships is as high as $1 million per day, excluding maintenance costs, CNOOC must establish its own deep-sea fleet and have its own deepwater drilling rigs.

AWO is able to meet such demand. According to COSL's announcement, AWO is an international offshore drilling contractor that owns and operates five jack-up drilling rigs and two accommodation units. It owns three other jack-up drilling rigs and three semi-submersible drilling rigs under construction. AWO also holds options for the construction of two semi-submersible drilling rigs. AWO has operations in Australia, Norway, Viet Nam and Saudi Arabia and in the Mediterranean.

The addition of AWO will greatly improve COSL's strength, doubling the company's current number of drilling rigs to 34. After the acquisition has been completed, COSL will have five rigs and own the eighth largest rig fleet in the world-three fewer than the sixth and five fewer than the seventh largest fleets. AWO's 762-meter deepwater drilling rigs can compensate for COSL's shortcomings, because it can drill in sea areas deeper than 500 meters.

The overall improvement of exploration and exploitation technologies will enhance CNOOC's profit-making ability. In its annual report for 2007, CNOOC predicted that its output of oil and gas would amount to 195-199 million barrels of an oil equivalent, an increase of 7-11 percent year on year. With addition of AWO, this target might be easily achieved.