Cnooc Ltd. (CEO), China 's biggest offshore oil and gas producer by output, said Thursday it expects its crude oil and natural gas production this year to rise by 8%-12% from 2010 through implementation of new projects in China and abroad.

Cnooc, a unit of China National Offshore Oil Corp., China 's third-largest oil company by assets, said it is targeting production of 355 million-365 million barrels of oil equivalent this year, up from 327 million-329 million barrels in 2010.

"The company will see a year of steady growth in 2011, laying a more solid base for our future development in the next five years," Chief Executive Yang Hua said in a statement.

The company expects its oil and gas output to rise at a compound annual rate of 6%-10% between 2011 and 2015, mainly driven by existing projects, the company said.

In 2011, the company plans to drill 96 exploration wells, focusing on offshore Chinese fields, especially deep-water areas of the South China Sea .

Four new projects offshore of China are expected to come onstream this year. Foreign fields including the Eagle Ford project in the U.S. and a project under its Argentine joint venture Bridas Corp. are also expected to start production, the company said.

Oil prices at two year highs--looking set to rise further--and China 's robust economic and oil demand growth will be positive for Cnooc's operations in 2011, analysts said.

China 's 2010 oil demand hit a record 10.2 million barrels a day in November, the International Energy Agency said. While the agency predicts that global oil demand growth will slow, there is little sign of big changes in China 's oil dynamics.

Cnooc spent at least US$8.29 billion in 2010 on acquisitions in Latin America and the U.S.

It expects to increase total capital expenditure this year by 55% to US$8.77 billion, and it is targeting a reserve replacement ratio of more than 100%.

Of Cnooc's total capital spending this year, US$1.56 billion will go toward exploration, US$5.05 billion will be used to develop oil and gas fields and US$2.02 billion will be spent on production, the company said.

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