CNOOC brings new South China Sea offshore Oil project on stream, targets 18,000 bpd by 2026

China’s leading offshore oil producer, CNOOC Ltd, has brought a new offshore oil development into production in the South China Sea, adding incremental supply as Beijing steps up efforts to strengthen domestic crude output and reduce reliance on imports.

The company said on Monday that the Xijiang Oilfields 24 Block Development Project, located in the shallow waters of the Pearl River Mouth Basin, has commenced production. At peak levels, the field is expected to produce about 18,000 barrels of light crude oil equivalent per day by 2026.

CNOOC said the project was developed by tying into existing infrastructure at the neighboring Huixi Oilfields, with the installation of a new unmanned wellhead platform. The development plan includes 10 development wells, which will feed into nearby processing facilities. The company holds a 100% interest in the project and is its operator.

The Pearl River Mouth Basin is one of China’s most established offshore producing areas, and projects like Xijiang 24 illustrate how CNOOC is squeezing additional output from mature basins through smaller, faster-to-market developments. By relying on adjacent infrastructure rather than building a standalone production hub, the company is reducing costs and shortening development timelines, an approach it has increasingly adopted across its offshore portfolio.

While the projected output from Xijiang 24 is modest by global standards, the project fits into a much larger strategic picture. China is the world’s largest crude oil importer, and its buying patterns have a major influence on global oil flows and pricing. Any sustained success in boosting domestic production would, over time, reshape demand dynamics in the international oil market.

Beijing has repeatedly called on state-owned oil companies to raise domestic output, citing energy security concerns amid geopolitical tensions and supply disruptions. Offshore developments in the South China Sea and Bohai Bay have therefore become central to this strategy, as onshore production growth has been harder to achieve.

If China were to make meaningful progress toward meeting a larger share of its crude needs locally, the implications would extend well beyond its borders. As one of the biggest buyers of crude oil globally, China has played a critical role in absorbing barrels from sanctioned producers, particularly Russia and Venezuela, at times when access to Western markets has been constrained by U.S. sanctions.

Since the tightening of sanctions on Moscow following the Ukraine war, China has emerged as one of Russia’s most important crude customers, alongside India. Similarly, Chinese refiners have been a key outlet for Venezuelan oil, providing Caracas with a vital export channel after U.S. measures sharply restricted its ability to sell crude openly on global markets.

A sustained reduction in China’s import demand, driven by higher domestic output, would therefore pose a structural risk to these suppliers. Russia and Venezuela, already operating with limited market access, could face greater competition to place their crude, potentially at steeper discounts, if China’s appetite for imported barrels eases.

For now, China remains heavily dependent on imports, and projects like Xijiang 24 will not materially alter that balance on their own. However, taken together with dozens of similar offshore developments, they signal a long-term policy direction. Incremental gains across multiple projects could gradually chip away at import dependence, particularly for light and medium grades that are well suited to China’s refining system.

CNOOC’s focus on unmanned platforms, digital monitoring, and infrastructure-led developments also suggests that future offshore projects could be brought on stream more quickly and with lower operating costs, improving the economics of domestic production.