CNOOC Makes First Foray into Kazakhstan with Oil Exploration Deal
By Luo Guoping and Denise Jia
China National Offshore Oil Corp. has entered Kazakhstan’s oil and gas sector for the first time, securing a landmark deal that could deepen China’s footprint in Central Asia’s energy-rich markets.
On Tuesday, CNOOC announced that its wholly owned subsidiary, CNOOC Hong Kong Holding Limited, signed an exploration and production contract for the Zhylyoi Block with Kazakhstan’s Ministry of Energy and state-run KazMunayGas (KMG). Both CNOOC and KMG will hold a 50% stake in the block and jointly operate through a newly established venture.
According to Kazinform, Kazakhstan’s state news agency, the two sides had already signed joint activity and financing agreements on April 30. Under those terms, CNOOC will fund the entire geological exploration phase and bear the associated early-stage risks.
The Zhylyoi Block spans roughly 958 square kilometers, straddling the Atyrau region and extending into Kazakhstan’s Caspian Sea territory. Preliminary estimates suggest the block could contain more than 185 million tonnes of oil resources, making it a prime target in Kazakhstan’s push to tap deeper subsoil reserves.
As one of the world’s top 20 oil producers, Kazakhstan is speeding up exploration across five underdeveloped subsoil zones. A December 2024 Kazinform report noted that international companies — such as Shell, Chevron, and China’s CNOOC, Sinopec and PetroChina — have shown growing interest in these untapped reserves, which may hold up to 1.7 billion tonnes of oil.
Askhat Khassenov, KMG’s chairman, acknowledged the high risks and capital intensity of deep drilling, citing a success rate of only 20% to 30% in exploratory wells. “Out of every 10 wells, only two or three might yield results,” he said.
CNOOC and KMG plan to undertake extensive geological work at the Zhylyoi Block, including 3D seismic surveys over 400 square kilometers, reinterpretation of historical 2D data and a phased deep drilling campaign. This includes a 2,000-meter pre-salt well followed by a 4,500-meter ultra-deep post-salt test well.
Their partnership dates back to October 2023 when the two parties signed a memorandum of understanding to boost cooperation in oil and gas exploration and field services. A series of follow-up agreements in 2024 — including a letter of intent in August and a framework deal in October — paved the way for the current contract. During the Boao Forum in March 2025, the two sides also explored offshore service cooperation opportunities for CNOOC in Kazakhstan.
Kazakhstan produced 88.2 million tonnes of crude oil in 2024, with KMG accounting for 27% of national output. The rest was dominated by international majors including Chevron, ExxonMobil, Shell, Eni and PetroChina.
CNOOC is China’s largest offshore oil and gas producer, with core operations in the Bohai Bay, the South China Sea and the East China Sea. The company holds assets in more than 20 countries and regions worldwide.
Contact reporter Denise Jia (huijuanjia@caixin.com)
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