CNOOC Limited Stock

[Interpreted] Good afternoon, everyone. Welcome to CNOOC Limited's 2025 Interim Results Announcement. Let me introduce to you our management in attendance. CNOOC Limited President, Mr. Yan Hongtao; CFO, Ms. Mu Xiuping; Independent Non-Executive Director, Mr. Lin Boqiang; and Joint Secretary, Mr. Xu Yugao.

This meeting is divided into three parts. First, President, Mr. Yan Hongtao, will make opening remarks. After that, CFO, Ms. Mu Xiuping will review the company's 2025 first half operations and financial performance. Then there will be a Q&A session with consecutive interpretation.

I will pass the floor to Mr. Yan.

[Interpreted] Shareholders, media friends, good afternoon. I'm very happy to see you here again to share with you CNOOC's 2025 first half interim results. In the first half of the year, we overcame the pressure of fluctuating and declining international oil prices, achieving significant results in reserve expansion and production growth and our cost control and value creation capabilities were enhanced.

We continued to enhance our reserve and production. We made 5 new discoveries and successfully appraised 18 oil and gas structures. So we solidified our natural reserve or resources base. We successfully brought 10 new projects into commencement of production with engineering construction on schedule.

Net oil and gas production reached 384.6 million BOEs, up 6.1% year-on-year with natural gas production rising 12%. We insist on oil and gas main business together with new energy. And so we also expedited our green development -- green transformation, sustainable development. We continue to develop with high quality and high sustainability and safety.

In the first half, we continued strong value creation capabilities and net profit attributable to shareholders, RMB 69.5 billion, #3 in our history. So we insist on sharing our development results with shareholders. We have decided to pay interim dividend of HKD 0.73 per share, inclusive of tax. And this is the #2 record in history. Payout ratio is 45.5%. In the second half, we will strive for progress amidst stability.

In technological developments, boosting of reserve and production and green transformation, we will put in our most effort to complete our yearly goal so that we can repay to our investors with even better results. Thank you.

[Interpreted] Thank you, Mr. Yan. Now we will invite Ms. Mu to continue the presentation.

[Interpreted] Honorable shareholders, analysts and media friends, good afternoon. Welcome to CNOOC 2025 interim results presentation. I am Mu Xiuping, CFO. This is the first time that I see you here. I'm very happy. Now I would like to report to you our company's operational and financial performance for first half '25. There are three parts in my report. First, business overview; and part two, highlights in production and operations; part three, future outlook.

First, business results overview. In the first half 2025, we overcame the pressure of fluctuating and declining international oil prices, achieving significant results in reserve expansion and production growth while steadily enhancing our value creation capabilities. During the period, we made 5 new discoveries and successfully appraised 18 oil and gas structures. And there are 10 new projects that commenced production successfully with engineering construction on schedule.

Net oil and gas production reached 384.6 million BOEs, up 6.1% year-on-year, with natural gas production rising by 12%, double digits. Meanwhile, the safety or HSE performance of the company remained stable.

For financial highlights, Brent oil price came down 15.1%, however, we achieved oil and gas sales of RMB 171.7 billion and also RMB 69.5 billion of net profit attributable to shareholders of the parent company. The decline is lower than that in oil price.

And all-in costs remained stable at USD 26.94 per BOE. To share development achievements with shareholders, the Board has approved an interim dividend of HKD 0.73 per share, including tax for 2025. Now you may know that in the past 10 years, we have built robust value creation capabilities that withstand oil price cycles by persistently expanding reserves, boosting production and reducing costs while enhancing efficiency.

On this slide, you can see that in the first half this year, international oil prices remained at the median level of the past decade. However, thanks to net production reaching a new historical high and all-in costs approaching their best-ever levels, the company's net profit attributable to shareholders reached the third highest level for the same period in history.

Next, I will report to you our operational highlights. For exploration, in the Bohai region, we made new discovery of Jinzhou 27-6, demonstrating broad exploration prospects in the Paleogene lithological place. The new discovery of Caofeidian 22-3 was made, showcasing favorable exploration prospects in shallow lithological area. In South China Sea, we made the new discovery of Weizhou 10-5 South, achieving a major breakthrough in the exploration of metamorphic buried hills, the first of its kind in South China Sea.

We successfully appraised Qinhuangdao 29-6 and Weizhou 10-5, both of which hold promise as medium- to large-sized oil and gas fields. And a successful appraisal of Lingshui 25-1, demonstrating the significant effectiveness of integrated rolling reserve expansion.

For overseas exploration, we have actively expanded our presence in strategically important regions. We signed a new oil contract in Kazakhstan's Zhylyoi block and assumed the role of operator for this block. Additionally, the oil contract for Iraq's Block 7 officially took effect in February this year. So we own 100% of its equity, and we also serve as the operator.

In terms of production in the first half of the year, our net production of oil and gas reached 384.6 million BOEs, a 6.1% increase year-on-year and setting a new record high for the same period in history. Natural gas production surged by 12% year-on-year, at double digit, primarily driven by contributions from projects such as the Shenhai-1 Phase II natural gas development project.

In terms of development, in the first half of the year, 10 new projects commenced production, significantly exceeding the number of projects which commenced production in the same period in past years. Below, I will introduce several key projects in our capacity expansion efforts.

Among new projects commissioned in Bohai region, the Caofeidian 6-4 Oilfield Comprehensive Adjustment Project leveraged existing facilities to enhance project economics. The Luda 5-2 North Oilfield extended life development project achieved efficient and economic exploitation of heavy crude through optimized injection production technology and expanded application. The Bozhong 26-6 Oilfield Development Project Phase I progressed from discovery to production in just 3 years, achieving plateau daily output exceeding 20,000 barrels of oil equivalent, demonstrating efficient and rapid conversion of reserves into production.

In South China Sea, the joint development of Panyu Blocks 10, 11 employs the Typhoon Production Mode to fully ensure production safety. The Wenchang 9-7 Oilfield Development Project utilizes flooding gas -- miscible gas flooding technology to significantly enhance project's recovery rate. The phase 2 natural gas development project of Shenhai-1 has commenced full-scale production, boosting the plateau annual gas output of Shenhai-1 gas field to 4.5 billion cubic meters.

Overseas, the commissioning of the Buzios7 project in Brazil will boost daily crude oil production at the Buzios field to 1 million barrels within the year, while the Mero4 project start-up will increase daily output at the Mero field to 770,000 barrels. South America will continue to serve as the company's most significant overseas source of oil and gas growth.

We remain committed to driving operational capability enhancements through technological innovation. In first half 2025, advanced geophysical technologies were widely deployed to significantly support deep exploration efforts. Large-scale application of cable-based and cable-free intelligent water injection technology helped reduce natural decline rates of China's offshore oilfields to 9.5%, achieving the best historical performance. Comprehensive advancement of intelligent drilling and completion initiatives resulted in a 26% acceleration in benchmark projects.

We systematically advanced digital and intelligent transformation with the Shenhai-1 smart gas field recognized as China's National Outstanding Smart Factory. By integrating satellite remote sensing, unmanned equipment and AI algorithms, we achieved precise tracing of marine oil spills and efficient emergency response to typhoon disasters.

While advancing our core oil and gas operations, we have continuously strengthened energy replacement, promoted flare gas recovery and utilization, scaled up permanent magnet electric submersible pumps, implemented lean electricity management and achieved new progress in clean oil and gas production.

We have made new progress in cultivating new energy in emerging industries. China's first offshore CCUS project commenced operations at the Enping 15-1 platform, pioneering a new mode of marine energy recycling that drives oil recovery with carbon that secures carbon with oil. The Wenchang 9-7 oilfield hosts the world's first 5-megawatt offshore high-temperature flue gas ORC power generation unit with expected annual electricity output of 40 million kilowatt hours.

While maintaining intensity of efforts to increase reserves and production, we established comprehensive health and safety system, strengthened hazard remediation, promoted digital and intelligent empowerment and deepened life cycle environmental management. In the first half of this year, the company's total recordable occupational injury incident rate and lost time injury rate remained at low levels.

Now let's examine our financial indicators. In the first half, our company's realized oil and gas prices largely followed market trend with oil and gas sales revenue and net profit attributable to shareholders remaining at high levels.

Now let's take a look at the changes in the key operating indicators. In the first half, net profit attributable to shareholders reached RMB 69.5 billion in the first half. This comparing on a year-on-year basis is down 12.8%. This is mainly because of decline in crude oil price. So we did a lot in boosting production. And also, we do lean management to control costs and improve efficiency to offset the impact. So our net profit attributable to shareholders is still #3, third best in history.

So here, we conducted a two-pronged comparison to more clearly demonstrate the steady improvement in the company's profitability. Compared to same period last year, despite a 15.1% decline in Brent crude oil prices, the decrease in the company's net profit attributable to shareholders was smaller than the drop in oil price. So net production volume up 6.1%, all-in cost down 20%.

And then in 2018, under similar oil price conditions, oil price is USD 71.2 per barrel. Now it's USD 70.8, it's more or less the same. Net profit attributable to shareholders surged by 172.9%. This is because of our company's sustained efforts in expanding reserves, boosting production, enhancing quality and increasing efficiency.

We remain committed to pursuing profitable growth in reserves and production with robust free cash flow reaching RMB 57 billion. So free cash flow is stable and adequate. The company maintained a sound financial position with total assets reaching RMB 1.119 trillion, an increase of RMB 62.7 billion from the beginning of the period. This is because of our profitability driving this increase. So we have gearing ratio of 8.4%, so showing a healthy financial position.

CapEx in the first half was HKD 57.6 billion, mainly used in exploration and development of production capacity and increase in production volume. CapEx were executed according to plan with satisfactory completion. In the first half this year, our all-in cost USD 26.94 per barrel, so it remained stable. There was good control. This is because of achieving economies of scale through increased reserves and production, synergistic cost reduction that enhanced operational efficiency and strict control of project expenditure.

We place high importance on shareholders' return and actively shared development achievements with shareholders. The Board decided to distribute interim dividend of HKD 0.73 per share, inclusive of tax for 2025 with dividend payout ratio of 45.5%. Last year, it's 40.3%, so we are up 5 percentage points. The increase in payout ratio enables us to maintain an absolute dividend level comparable to last year despite a decline in net profit, achieving the second highest dividend payout in the company's history for this period.

Finally, let's review together our future outlook. At the beginning of the year, we talked about future business strategies and goals. In 2025, our main goal won't change. Looking into the future, we will persist in advancing increasing oil and gas reserves and production, promoting green energy transition and fostering independent technological innovation. So we will continue to adhere to quality enhancement, efficiency improvement and upgrading campaign. And so we will continue to enhance our value creation capabilities to deliver greater return for shareholders. That concludes my presentation.

Ladies and gentlemen, we now begin our Q&A session. [Operator Instructions] Let's wait for our first question. The lady in the first row.

[Interpreted] I have two questions to ask. The first question is about Chinese market. The natural gas production volume rose in the second quarter on a quarter-on-quarter basis. And also, your average selling price is better than your other peers. What are the reasons behind this? Is it true that the overseas price is better, or the domestic price is better? Then can you give a price outlook for Chinese market of natural gas in 2026?

My second question is your dividend payout has improved by 5 percentage points. So are you going to also improve your dividend payout by 5% for the whole year? That means at 50%. Will it be the case?

[Interpreted] Okay. So let me answer the first question about natural gas. So your question is about the production volume and price of natural gas. It has been one of our very important strategies to develop natural gas business. In the first half of the year -- first half of 2025, total production of natural gas amounted to 216.2 million cubic meters, so up 2%. This is mainly because of our additional reserves and production in phase 2 of Shenhai-1 and also the Bozhong project. So with new projects commencing and also additional reserves and production in the western area of South China Sea and Bohai region, as a result, our total production volume of natural gas had increased.

For the overseas market, our major region -- production region for natural gas is Guyana. So if we are able to identify appropriate markets, then we will definitely continue to explore new production facilities or regions for natural gas.

Well, the unique characteristics of natural gas production is that, first of all, its cycle is longer, its cost is usually lower. Besides we do business usually in the format of signing long-term agreement and contracts. So as a result, the price has been more stable, and there would be also a reasonable stable cash flow.

Right now, in all over the global market for natural gas business and operation, it is not based on standard price. So if you look at, for example, LNG spot price, you will realize that there are a number of factors that would affect the price level, including, for instance, geopolitical situation and also climatic changes and weather.

So well, for our company, we are not using the natural gas business to -- as a means to lower our business in crude oil. Still our major business, our focus is still in crude oil business. However, that is because for crude oil business, the economics are better. But then we still want to make use of natural gas to supplement to the original business. And we hope that the ratio, the share of natural gas production can gradually increase because this is also a means for us to get into the development of clean energy.

And then in terms of price, we enjoy stable price because we have a stable sales system, and we have a way to identify the best market price. We have got a mechanism to do that. So we believe that in the medium to long term, if you consider the international natural gas price in the coming few years, there will be a decline in international natural gas price.

[Interpreted] Now let me answer your question concerning dividend payout. So we had already announced or proposed that the interim dividend is going to be HKD 0.73 per share and dividend payout ratio is at 45.51%. So the total amount of dividend payment will amount to HKD 31.64 billion. These amounts are more or less the same year-on-year. So given the decrease in oil price by 15.1%, well, it is not easy for us to propose and arrange such a dividend payout ratio. So because as I mentioned in our presentation, we exercised lean management. At the same time, we achieved a boost in both reserve and production. So we are able to enhance our overall business results. So our profit only came down by 12.8%, while oil price actually came down 15.1%.

So if you look at our dividend for this interim period, actually, the payout ratio is already the second highest in our history. And all along, we have been striving for high-quality development, and we want to share the results and fruits of our development together with our shareholders and investors. So we have already set the dividend policy for the coming 3 years. No matter how the international oil price is going to change, our policy and our principle of paying back to shareholders won't change.

So you asked about the dividend payout for the second half of the year. We will take into consideration a number of factors. For example, our production situation, our operations, our financial position, our investment opportunities. We will also benchmark ourselves against similar companies. And we also take into consideration the dividend policy that we have already set in setting the coming dividend payout ratio. So again, we will adhere to the principle of high-quality development. And in this way, we can enhance the corporate value for our company, and we are able to make sure our dividend payment is reasonable. We can reasonably share our fruits and results of development together with all shareholders and investors. Thank you.

The first question is taken by Mr. Yan Hongtao, President of the company. The second one is taken by Ms. Mu Xiuping, CFO of the company.

[Interpreted] I have two questions. In the first half of the year, you achieved cost reduction as well as efficiency improvement. Now in the second half of the year, how is oil price going to change? And what about cost reduction? What will be the further room for cost reduction and efficiency improvement in the second half of the year?

My second question is, you mentioned new energy business development. So do you have any plans or any measures or initiatives in this area, please?

[Interpreted] So okay, let me first answer your question concerning cost. In the first half of the year, our all-in cost was USD 26.94 per barrel. And then last year, in the same period, it was USD 27.75. So there is a 2.9% drop year-on-year. And then all along, we upheld our low-cost strategy. This is our core competitiveness over the long term. So over the past 10 years, we have been able to control the all-in cost to around USD 30 per barrel.

So in terms of cost control, as I said earlier, achieving a low cost has been our strategy over the long period of time. And by achieving -- by exercising cost control, we're able to enhance our overall economic benefits. In the second half of the year, we will continue to apply low-cost strategy with a number of specific measures as follows: The first one is about technological improvements and innovation. So for instance, we will adopt measures like stabilizing oil and controlling water. We will continue to invest into further technological innovation to help drive down cost.

The second measure is about lean management. So we need to enhance our workflow and processes. And also, we will standardize our engineering construction. We will optimize and enhance our logistics. So all these will help to drive costs down. Actually, every quarter, we hold lean management meeting, regular meetings, also attended by Mr. Yan as well. So because of this effort in lean management, we are able to control and lower our fixed costs.

And the third measure is about increasing reserve and production. So as mentioned in our presentation, in the first half this year, our production volume increased, achieving a new level in our history. So because of this, our variable cost and fixed cost can be diluted.

The fourth measure is an improvement in our investment structure. So we try to do management at source of all our investments. And in this way, we are able to lower the DDA and also safe production is also an important factor that can help lower cost.

So all-in-all speaking, when we are able to lower cost, then we will be able to continue to maintain our high-quality development. However, when I say that we uphold a low-cost strategy, it doesn't mean that we would indefinitely lower and compress cost. We just want to ensure that we can stick to our low-cost strategy to attain high-quality development.

[Interpreted] So now let me comment on the oil price. So to our business, the change in oil price indeed will cause a lot of impact. In fact, if you talk about the main source of energy, oil is still the main energy source, and it is highly correlated with the economy and economic growth.

Now there are a lot of factors that would affect oil price. And in fact, in recent years, there are more and more factors affecting oil price. We have been forecasting about oil price in the past 20 to 30 years, and we are of the view that this task is getting less and less easy, more and more difficult because more and more factors affect oil price nowadays, including geopolitics, for example, Russian-Ukrainian war and also the situation over the Middle East and President Trump's tariff policy and so on.

So today, I took a look at the Brent oil price is at USD 68 level. At the same time, there are a few dynamic factors that affect the situation. First of all, is OPEC growth, but then it has been more or less digested. The second factor is Trump's policy to encourage traditional fossil fuel and also oil and gas development. But then in the past 13 years, we realized that the number of oil and gas drilling plants and equipment had come down. So basically, that's because oil companies are very sensitive to oil price. The third dynamic factor is the uncertainty in the tariff situation. So even though there is uncertainty, however, the amount of uncertainty was already less than that a couple of months ago.

So overall speaking, if you talk about the replacement by new energy, then I think it is premature to talk about that because new energy development is a long-term matter. So right now, I have talked to a number of large organizations who have done forecast of oil price. And the consensus is roughly around USD 65 to USD 70. So even though there is still uncertainty, we can believe that for 2025, the oil price level will be around USD 65 to USD 70 based on most large organizations forecast.

Oil price is definitely uncontrollable. So CNOOC as a company can do the following two things. First of all, we need to continue to increase production and reserve. And secondly, we need to exercise cost control. So no matter how the oil price is going to change, if we are able to successfully do these two things, then we will be able to pay back to shareholders and deliver, generate good shareholder returns. Thank you.

[Interpreted] So first of all, I would like to say that I agree with what Mr. Lin just mentioned concerning the oil price. So let me now supplement in relation to oil price as well as our cost.

So I think it is a very important way of survival for the upstream companies like our company to see how we should do a better job no matter what the oil price is at. So we are a company -- we are an upstream company focusing mainly on exploration, development and production. And we have to do a good job in terms of five areas. First of all, our reserve; second, our production; third, our cost; fourth, our safety and also then oil price.

So when it comes to oil price impact on profitability, of course, profit is very sensitive to changes in oil price. And oil price is something that is not controllable at all. And in history, we have gone through periods of high oil price as well as low oil price. And from all these moments, we had gains and pain as well. And so we have learned from past lesson and experience in finding a way to achieve better survival and results. Now we are already rather mature in riding out all these ups and downs.

And so what I would like to say is that we have actually transcended beyond the bulls and the bears in oil price. So earlier on, our CEO had a meeting with media friends and representative. And he had also made some remarks and shared some insights in relation to oil price. Now I would like to repeat some of the salient points.

So overall speaking, we are a company that doesn't want to rely on a high oil price. Well, because we are not a speculative company, we are a very stable company that actually wants to solidify our foundation so that we are able to become a company with 100 years of history, and we should be able to withstand all the risk no matter whether the oil price is high or low.

So if we rely on a high oil price, then of course, with high oil price, that will bring higher profits. However, if the low -- if the oil price is low, then companies that do not have good fundamentals will die. So we have to do good preparation for low oil price. We do hope to see high oil price. However, high oil price will also obscure a lot of development problems, even though there may be high profit for us. At low oil price, then it all depends on whether the company has good competitiveness in the international market.

So when the oil price is low, it is a matter of who can survive till the end and who will die fast. So we have to make sure that those companies with low cost of production, as what we have achieved, can survive. And in the long run, we have to do all the preparation for low oil price scenario by solidifying our foundation. As you know, we have good cash flow position, and we have quite a lot of cash on hand, so we do want to see a low oil price cycle so that we can identify more M&A opportunities and more attractive opportunities overseas as well. So that's all in relation to my comment on oil price.

Let me comment on new energy development. So in the long run, definitely, we will still focus on our oil and gas business because that is our core. And so the volume for natural -- for new energy for the time being will be less. But just now you asked this question about new energy development. I'm sure it actually comprises a number of sub questions. For example, why do we want to do new energy business? How are we going to do it? Are there more pros or cons in doing new energy business? And what are the impacts?

So at present, if you talk about the year 2025 for new energy resources, we have got a plan about 500 to 1,000 million kilowatt hours. We already have that resources in place. This is according to our plan and schedule. And for example, we are developing offshore wind power. We have projects in Hainan and also the Lufeng clean energy development project, which had already started the operation. And we believe that next year, power generation will start.

And then when it comes to onshore wind and solar power projects, the strength is that we have our own distributed PV system. So in this way, we are able to make our electricity greener instead of using the externally generated electricity. Of course, when we consider a certain project, whether or not we are going to invest and develop it, we have our own investment requirements and thresholds. No matter whether it is oil and gas projects or new energy projects, it has to be able to pass our internal investment threshold and requirement. And we are doing -- we will continue to do more technological innovations in relation to offshore wind power development so as to drive down cost.

In the long run, if you ask whether or not we are going to or we should develop new energy business, definitely. Why? The reasons are as follows. For traditional energy, now we are trying to make use of new energy business development to make things greener to achieve green transformation. And the important point is that there will be synergy with our existing core oil and gas business. So we can make use of the green energy to make our production cleaner overall speaking. And it can also replace thermal power and also power generation by using oil.

Then the overall yield and benefits for the oilfields will also be enhanced and electricity tariff will also be cheaper. And then we believe that there are also benefits in the development of new energy business. However, we are not going to blindly strive for scale and volume even at a loss. So if there is no appropriate project, then we will just stop doing that business for the time being. So it is very important for us to look for appropriate projects in which there may be a certain kind of monopoly or a kind of moat so that we can enjoy more benefits arising from that.

So we hope that it is going to become our second growth curve for our business development. We are not going to develop for the sake of development. And we definitely will not be striving for volume increase without other consideration because we believe that quality development is even more important. We will continue to do more R&D. And then when it comes to global new energy development, we will make sure that our company will take part in it so that in the coming 10 to 30 years, when there are more and more new energy development in the world, we won't be left behind. We will still have an important place in the process.

After 30 to 50 years in that process, we believe that it is going to be a gradual phasing out process. So that means traditional energy sources like oil and gas will not all of a sudden be phased out. It is going to be a gradual process, one up and the other down and so on. So the above answers the question about new energy development, whether we should do it and how we are going to do it and the pros and cons. Thank you.

Now let me add a point, which is also the most important point. In my career of my life, we want to emphasize the point that oil and gas will remain the most important and core business for our company, no matter how other businesses like new energy development is going to thrive. Now new energy development definitely will not affect our oil and gas business. So this remark was already made by our Board Chairman in his recent report that oil and gas will remain the core and most important businesses for our company.

Thank you. The first question was taken by Ms. Mu Xiuping, CFO of the company; and Mr. Lin Boqiang, Independent Non-Executive Director of the company, respectively. And the second one was taken by Mr. Yan Hongtao, President of the company.

The lady in the second row.

[Interpreted] My question is about investment gain or loss. In the first half of the year, there was a loss by CNY 1.3 billion. What are the reasons behind that? Is it related to the loss incurred by the JV in Argentina? If there indeed is a loss by the Argentina JV, what are the reasons behind?

[Interpreted] As you mentioned, in the first half of this year, there was loss suffered by JV and associate company, mainly with the [ BC, a company ] that is in Argentina. We hold 50% equity or shareholding in that company. That company is not a listed company. The publishing of their annual report actually happened in the first half this year, they have published their audited report already, and there was the revaluation and also audited results for the previous fiscal year.

So all these reporting is done in accordance with accounting standards. And based on their audited profit, the number is being recognized and reflected in our own financial statements. And it is true that there is an investment loss being recognized. However, it is based on the actual operating results and the prevailing market environment, but it is not going -- it is not a long-term loss. And this reporting is done definitely in accordance with the accounting standards.

Thank you. This question was taken by Ms. Mu Xiuping, CFO of the company.

[Interpreted] I have two questions to ask. Actually, first of all, I would like to congratulate the company on the outstanding results. My first question is about natural gas. So we see that the growth in natural gas is very strong. In the future, so I understand that, as you have said earlier, there is the increase in production in the South China Sea area project, the Bohai area project as well as overseas Guyana project. So is it going to -- can we anticipate also strong growth in natural gas in the coming period? And if you talk about the coastal area sales of natural gas, it is very strong. In terms of your downstream market development strategy, what strategy have you put in place?

Then my next question is about the direction of CapEx and also your oil and gas production volume guidance. So well, you have already mentioned your production volume growth targets earlier. But can you give some more concrete direction, especially in terms of CapEx and actual numbers in relation to oil and gas production volume growth?

[Interpreted] Let me comment on our natural gas business. So you asked about the trend of natural gas market price. There are a lot of factors affecting that. And well, we have seen fluctuations and volatility in the natural gas market price. Well, no one can be very accurate in predicting the price level because there are so many dimensions and factors impacting it.

Basically, if you look at our natural gas business, we basically focus in the domestic market, that is our main market. And so far, we have seen a stable trend. In the long run, we believe that international LNG price will decline gradually. And right now, international price level is lower than the domestic price level. And gradually, we believe that the two prices are going to somewhat converge.

In the international market, of course, there are a number of related incidents that will affect the trend, the price trend of the international market. For the domestic price, it is more stable for us, mainly because of our very unique sales arrangement. We have professional company that is able to have a mechanism to find the best market price. And at the same time, we can ensure a certain breadth of the market.

So besides for LNG, we have also got some room for import of LNG into the market. So we have a mechanism to ensure production and ensure supply. So when there are anything -- any incidents or any matters related to the market, then priority has to be given to the gas fields in China for production. So right now, given this very unique mechanism, many other peers and other companies would like to learn from our approach.

When it comes to natural gas, the natural gas field and oilfields are very different. For natural gas, the economic benefits are inferior to oilfields. However, the development cycle is usually longer. And in fact, there is no decline. If you look at the recovery rate, usually for natural gas, it is higher than 50%. Very often, it can go to 60%, 70%. In overseas, it can be as high as 80%. However, for crude oil, usually, the rate is 30%. In better cases like our company's rate, it can be 50%, but still lower than natural gas. So basically, these are the details in relation to our natural gas business development.

You asked a question about CapEx. Well, of course, people will look at CapEx to gauge a company's future development. In relation to CapEx, it is a volatile concept. It is not constantly steady. So there are volatility. And there are fluctuations at different oilfields as well. In the first half of the year, if you talk about our CapEx, it is lower on a year-on-year basis.

However, this is not something that we are doing intentionally. This is not a result of our lessened resources. There are some coincidental factors. For example, in this year, there are a number of operations, which are quite near to navigation routes. So as a result, we have to do more safety work. We have to convince the authority that our operations are safe, both for the navigation pathways as well as for ourselves. So the time required is longer as a result.

In the second half of the year, we believe that CapEx is going to be bigger than in the first half. However, as I said, there will still be fluctuations. If there are big volatility or fluctuations, then that may be a problem. However, you don't need to worry at all about small fluctuations.

And then if you turn to the medium to long term within China, well, as we always emphasize, we have to maintain growth in both our production volume of crude -- of oil as well as gas. So production volume, for instance, for oil will have to be kept at 300 million [ tonnes. ] And for gas, it will be like 10 billion cubic meter of volume. So in other words, we have to make sure that we can invest in production capacity of, for example, 10 million [ tonnes ] a year so that some capacity can be reflected in the prevailing year production volume. Again, there will be fluctuations and volatility.

And if you turn to the international market, we hope that there will be investment opportunities. However, it is not that if we -- it is not true that we search for such opportunities, then those opportunities will arise. So we will capture opportunities when they arise, but we can't promise.

All right. Thank you. This question is taken by the President of the company, Mr. Yan Hongtao.

[Interpreted] Three questions regarding the overseas business, you mentioned just now that you will pay attention to potential new opportunities. So do you have any specific requirements in relation to the location that is the region where the opportunities are in and also the scale?

Second question, this year, there are quite a lot of typhoons offshore. And has there been impact on your production? Are you going to strengthen your measures or approach in face of that?

The third question is about the oilfield and project in Bozhong. You mentioned in your presentation that it only took 3 years for it to go from discovery to production. So in the future, do you think that there will be similar operations or projects that we will see?

[Interpreted] The first question, when it comes to overseas development, well, this direction is certain. So regarding the 15th 5-year plan, we are in the process of formulating that plan. So at this moment in time, I am not in a position to disclose too much detail and information regarding the 15th 5-year plan.

And then your next question is concerning Typhoon. You are very professional in your observation. Well, I have been working for many years in the past on the front line, and I am aware of the arrangement about suspending the operations of some rigs or platforms. So most oilfields and gas fields along the South China Sea is equipped with a remote arrangement of suspension of platforms in case of typhoon. So comparing with the past, we have already reduced our loss by 50% in terms of Typhoon. And then this year, we have already provided for 300,000 to 400,000 [ tonnes ] of production volume in relation to typhoon impact.

So this will not -- as a result, the typhoon occurrence will not affect the forecast that we have already given you. So if the situation is better than what we have already budgeted, then our production volume will actually increase and vice versa. So we have monitored the situation about typhoon in the past 10 years and the associated impact. So all these have been already provided for in the budget.

And then you talked about an oilfield, which we're able to only spend 3 years to bring it from discovery to commencement of production. Well, this is, of course, the best case that we are sharing with you. It is difficult for us to guarantee that all the projects will be able to achieve this very good standard. However, this is also our target. We are not relying on simple luck to achieve that. We are trying to move towards this result by putting in place standardized design. So by having standardized design, we are able to shorten the lead time by 3 to 4 months.

And also, given this shortened period, we are able to advance our procurement work as well and also, we can do earlier preparation work for production. So by doing that, we can further shorten the lead time by 6 months. So now we are trying to gradually achieve a shorter lead time in production commencement. Overall speaking, we can shorten the process by around 8 months, but this is not achievable by all projects. It is just what we have been putting our effort in.

And for the oilfields' situation, a very important point that we are trying to do is about better procurement efforts. In this way, we can enhance our efficiency. And then we are doing technology innovation as well as lean management. These are two wheels that drive efficiency improvement. So as such, we can enhance our quality and efficiency. The ultimate goal is to lower our all-in cost.

The impact of typhoon on our production volume is around 250,000 [ tonnes. ] This summer is going to be over soon, and we are now monitoring the situation about typhoons in autumn. We will not relax our efforts. This year, we believe that there won't be an impact on our actual production volume. We have confidence to maintain our production volume target.

Thank you. This question was taken by Mr. Yan Hongtao, President of the company.

Ladies and gentlemen, this concludes today's presentation. We thank you very much for your attendance and hope to see you very soon. Thank you.

[Portions of this transcript that are marked [Interpreted] were spoken by an interpreter present on the live call.]