HONG KONG, March 16 (Xinhuanet) -- The Standard & Poor's Ratings Services said Tuesday that its rating on China's CNOOC would not be affected by the company's announcement of a substantial increase in net profit for fiscal 2003, because the results are within Standard & Poor's expectations.

    The rating services has rated the foreign currency of CNOOC (China National Offshore Oil Corp. Ltd ) as BBB+/Positive. The company reported a net profit increase of 32 percent to 11.98 billion yuan (1.44 billion US dollars) under US generally acceptedaccounting principles, as a result of higher oil prices.

    The rating services said however, the positive effect of higher oil prices has been partially offset by an increase in production costs.

    Standard & Poor's said a shift by the company towards production of lower-value heavy crude oil resulted in higher production costs of 9.62 US dollar per barrel of oil equivalent (BOE) in 2003 compared with 8.48 per BOE in 2002, because of difficulties in extracting the heavier crude oil.

    The rating service said CNOOC's capital structure remains very strong. It has net cash of 13.3 billion yuan (1.60 billion USdollars) at the end of 2003. The company made nine discoveries and10 successful appraisals in 2003, a combined total of 12 were achieved through independent exploration. Enditem