High oil prices drove first half profits 11 per cent higher at China’s dominant offshore producer CNOOC Ltd, but rising costs and sluggish output growth capped gains.

Analysts expect the same factors to put a lid on earnings in the second half for a full-year improvement of 17 per cent, even though crude prices reached record levels recently.
China is scrambling to find more of its own hydrocarbons to fuel its booming economy.
CNOOC is at the heart of those efforts, but they will not make much of a dent this year — and at considerable cost to its margins.
“We are taking advantage of the current favourable oil price environment to maximise offshore China production through additional enhanced expenditure,” said CNOOC president Zhou Shouwei.
“Even though the incremental production carries higher costs, its financial case with high oil prices looks appealing,” he added.
The state-run company said net profit was seven billion yuan (US$845.41 million) in the six months to end-June. That compared with a net profit of 6.3 billion yuan a year ago.
The result was below market expectations for a 7.2 billion yuan profit.
CNOOC’s total oil and gas production rose 4.3 per cent in the first half to 66.6 million BOE.
Meanwhile, the drilling service unit of CNOOC, China Oilfield Services Ltd, posted a forecast-beating 38.6 per cent rise in first-half profit as a tax rebate offset higher costs.