China’s state-owned offshore oil and gas company CNOOC has lowered its planned capital expenditure (capex) and production guidance for 2020. It says the move will strengthen it in to face the Covid-19 pandemic.

The capex target was reduced from $12bn-$13.4bn (CNY85bn-CNY95bn), to between $10.6bn and $12bn (CNY75bn-CNY85bn).

The company’s net production during the first quarter this year totaled 131.5 million barrels of oil equivalent (MMboe), an increase of 9.5% year on year.

Due to currently low oil prices, CNOOC also lowered its annual oil and gas output target to around 510 MMboe, from around 525 MMboe.

According to CNOOC, production from the company’s fields offshore China rose 9.7% year on year. It produced 87.1MMboe in Q1 2020, majorly attributable to start of new projects and the acquisition of China United Coalbed Methane.

CNOOC CEO Xu Keqiang said: “The global oil and gas market was facing an unprecedented situation in the first quarter of 2020 as impacted by the Covid-19 pandemic and sharp drop of international oil prices.

“In response to an increasingly complex external environment, CNOOC took proactive measures to face the challenges and strived to mitigate the impact. For the rest of the year, we will continue to implement more stringent cost controls, and further strengthen our cash flow management.”

Earlier this month, CNOOC stated it will reduce its annual investment by 10% to 15% in 2020, in order to increase its domestic crude oil and natural gas production for the year.

In August last year, CNOOC West Africa Petroleum signed an agreement to acquire a 55.55% participating interest in the Sinapa and Esperanca petroleum licences, located offshore Guinea-Bissau, from Svenska Petroleum Exploration.