The foreign currency rating on CNOOC Ltd., mainland China's third-largest oil and gas company, reflects its large reserve base, good growth opportunities, relatively low cost position, and strong financial profile. These factors are offset by the volatile nature of oil and gas prices, the risks associated with bringing on stream a large undeveloped reserve base, high capital expenditure requirements, and increasing uncertainties associated with the company's overseas expansions. CNOOC Ltd. was established through the reorganization of its state-owned parent, China National Offshore Oil Corp. (CNOOC; BBB/Positive/--). CNOOC has the exclusive right to represent the government, in cooperation with foreign investors, in the exploration and development of the country's offshore petroleum and natural gas. CNOOC Ltd., the dominant subsidiary of the
