UNITED
STATES

SECURITIES
AND EXCHANGE COMMISSION



Washington, D.C. 20549



|
|

FORM 20-F/A



(Amendment
No. 1)



(Mark One)



| |  ̈ | REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ----------------------------------------------------------------------------------------------



OR



| | ý | ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
For the fiscal year ended December 31, 2017
| | - | --------------------------------------------------------------------------------------------------------------------------------



OR



| |  ̈ | TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | ----------------------------------------------------------------------------------------



OR



| |  ̈ | SHELL COMPANY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
| | - | -------------------------------------------------------------------------------------------



Date of event requiring this
shell company report ________________



Commission File Number 1-14966



CNOOC LIMITED

中國海洋石油有限公司

(Exact name of Registrant as specified
in its charter)

N/A

(Translation of Registrant’s
name into English)



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|

Hong Kong



(Jurisdiction of incorporation or organization)



|
|

65th Floor, Bank of China Tower



One Garden Road, Central



Hong Kong



(Address of principal executive offices)



|
|

Jiewen Li



65th Floor, Bank of China Tower



One Garden Road, Central



Hong Kong



Tel +852 2213 2500



Fax +852 2525 9322

(Name, telephone, e-mail and/or facsimile
number and address of company contact person)



|
|

Securities registered or to be registered
pursuant to Section 12(b) of the Act.



|Title of each class                                                     | Name of each exchange on which registered                             
|----------------------------------------------------------------------- | ----------------------------------------------------------------------
|American depositary shares, each representing 100 shares
        Shares | New York Stock Exchange, Inc.
        New York Stock Exchange,
Inc.(1)



Securities registered or to be registered
pursuant to Section 12(g) of the Act.None

(Title of Class)















Securities for which there is a reporting
obligation pursuant to Section 15(d) of the Act.None

(Title of Class)



Indicate the number of outstanding shares
of each of the issuer’s classes of capital or common stock as of the close of the period covered by the annual report.





|Shares | 44,647,455,984
|------ | --------------



Indicate by check mark
if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.



Yes ý
No  ̈



If this report is an
annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or
15(d) of the Securities Exchange Act of 1934.



Yes  ̈
No ý



Note – Checking
the box above will not relieve any registrant required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange
Act of 1934 from their obligations under those Sections.



Indicate by check mark
whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of
1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2)
has been subject to such filing requirements for the past 90 days.



Yes ý
No  ̈



Indicate by check mark
whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months
(or for such shorter period that the registrant was required to submit and post such files).



Yes
 ̈ No ý



Indicate by check mark
whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or an emerging growth company.
See definition of “large accelerated filer, “accelerated filer,” and “emerging growth company” in
Rule 12b-2 of the Exchange Act.





|Large accelerated filer    ý | Accelerated filer     ̈ | Non-accelerated filer     ̈
|---------------------------- | ---------------------- | --------------------------
|                             |                        | Emerging growth company  ̈ 





If an emerging growth
company that prepares its financial statements in accordance with U.S. GAAP, indicate by check mark if the registrant has elected
not to use the extended transition period for complying with any new or revised financial accounting standards† provided
pursuant to Section 13(a) of the Exchange Act. 	  ̈



† The term “new
or revised financial accounting standard” refers to any update issued by the Financial Accounting Standards Board to its
Accounting Standards Codification after April 5, 2012.



Indicate by check mark
which basis of accounting the registrant has used to prepare the financial statements included in this filing:



U.S. GAAP  ̈



International Financial Reporting Standards as issued by the International Accounting Standards Board ý



Other  ̈



If “Other”
has been checked in response to the previous question, indicate by check mark which financial statement item the registrant has
elected to follow.



Item 17  ̈
Item 18  ̈



If this is an annual
report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).



Yes  ̈
No ý



(1)       Not for trading, but only in connection with the registration of American depositary
shares.









TABLE OF CONTENTS



|                              | Page
|----------------------------- | ----
|EXPLANATORY NOTE              | 1   
|ITEM 18. FINANCIAL STATEMENTS | 2   
|ITEM 19. EXHIBITS             | 2   







Explanatory Note





This Amendment No.1 to our annual report
on Form 20-F for the fiscal year ended December 31, 2017, previously filed on April 19, 2018, is being filed solely for the
purpose of (i) adding the section of Supplementary Information on Oil and Gas Producing Activities in the Report of Independent
Registered Public Accounting Firm in the 2017 Form 20-F; and (ii) making the following corrections to certain typographical
errors in the Report of Independent Registered Public Accounting Firm in the 2017 Form 20-F: adding the total amount on “Impairment”
of “(10,768)” and the total amount on “Depreciation charge for the year” of “(60,802)” with
respect to Item 13 (Property, Plant and Equipment) on page F-46. As required by Rule 12b-15 of the Securities and Exchange Act
of 1934, as amended, the Company is also filing and furnishing as exhibits to this Amendment No.1 the certifications required
under Section 302 and Section 906 of the Sarbanes-Oxley Act of 2002, respectively.



This Amendment No.1 speaks as of the filing date of the 2017 Form 20-F on April 19, 2018. Other than
as set forth above, this Amendment No.1 does not, and does not purport to, amend, update or restate any other information or disclosure
included in the 2017 Form 20-F.







1





ITEM 18. FINANCIAL STATEMENTS



See pages beginning on page F-1 following
Item 19.



ITEM 19. EXHIBITS



The following documents are filed as part
of this annual report:



|ExhibitNumber | Document                                                                                                                                                                                                                                                                                                                                                            
|------------- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|              |                                                                                                                                                                                                                                                                                                                                                                     
|1.1           | Articles of Association of the Registrant, as amended in 2009, incorporated by reference to Exhibit 1.1 to our Annual Report on Form 20-F for fiscal year 2010 filed with the Securities and Exchange Commission (File number: 1-14966) and Exhibit 99.1 to Form 6-K furnished with the Securities and Exchange Commission on March 30, 2012 (File number: 1-14966).
|1.2           | Memorandum of Association of the Registrant, incorporated by reference to Exhibit 3.2 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862) and Exhibit 99.1 to Form 6-K furnished with the Securities and Exchange Commission on March 30, 2012 (File number: 1-14966).                             
|2.1           | Form of Indenture, incorporated by reference to Exhibit 2.1 to our annual report on Form 20-F for fiscal year 2002 filed with the Securities and Exchange Commission (File Number: 1-14966).                                                                                                                                                                        
|2.2           | Trust Deed dated December 15, 2004 among CNOOC Limited, CNOOC Finance (2004) Limited and J.P. Morgan Corporate Trustee Services Limited, incorporated by reference to Exhibit 2.2 to our annual report on Form 20-F for fiscal year 2004 filed with the Securities and Exchange Commission (File Number: 1-14966).                                                  
|2.3           | Indentures dated January 26, 2011 among CNOOC Finance (2011) Limited, as Issuer, CNOOC Limited, as Guarantor, and The Bank of New York Mellon, as Trustee*.                                                                                                                                                                                                         
|2.4           | Indentures dated May 2, 2012 among CNOOC Finance (2012) Limited, as Issuer, CNOOC Limited, as Guarantor, Citicorp International Limited, as Trustee, Citibank, N.A., London Brach, as Paying Agent, and Citigroup Global Markets Deutschland AG, as Registrar*.                                                                                                     
|2.5           | Fourth Supplemental Indenture dated March 22, 2013 to the Senior Debt Indenture dated May 4, 2007 among CNOOC Limited, Deutsche Bank Trust Company Americas and Nexen Inc., incorporated by reference to Exhibit 4.1 to Form 6-K furnished with the Securities and Exchange Commission on March 22, 2013 (File number: 1-14966).                                    
|2.6           | Seventh Supplemental Indenture dated March 22, 2013 to the Trust Indenture dated April 28, 1998 among CNOOC Limited, CIBC Mellon Trust Company, The Bank of New York Mellon and Nexen Inc., incorporated by reference to Exhibit 4.2 to Form 6-K furnished with the Securities and Exchange Commission on March 22, 2013 (File number: 1-14966).                    
|2.7           | Form of Indenture among CNOOC Finance (2013) Limited, CNOOC Limited and The Bank of New York Mellon, incorporated by reference to Exhibit 4.1 to Form F-3 filed with the Securities and Exchange Commission on May 1, 2013 (File number: 333-188261)                                                                                                                





_______________________



*Pursuant to Instruction 2(b)(i) to Item 19 of Form 20-F, we undertake to furnish this
document upon request of the Securities and Exchange Commission.



*Pursuant to Instruction 2(b)(i) to Item 19 of Form 20-F, we undertake to furnish this
document upon request of the Securities and Exchange Commission.



2





|2.8  | Form of 1.125% Guaranteed Note due 2016, incorporated by reference to Exhibit 4.2 to Form 6-K furnished with the Securities and Exchange Commission on May 9, 2013 (File number: 1-14966)                                                                                                         
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|2.9  | Form of 1.750% Guaranteed Note due 2018, incorporated by reference to Exhibit 4.3 to Form 6-K furnished with the Securities and Exchange Commission on May 9, 2013 (File number: 1-14966)                                                                                                         
|2.10 | Form of 3.000% Guaranteed Note due 2023, incorporated by reference to Exhibit 4.4 to Form 6-K furnished with the Securities and Exchange Commission on May 9, 2013 (File number: 1-14966)                                                                                                         
|2.11 | Form of 4.250% Guaranteed Note due 2043, incorporated by reference to Exhibit 4.5 to Form 6-K furnished with the Securities and Exchange Commission on May 9, 2013 (File number: 1-14966)                                                                                                         
|2.12 | Form of Indenture among CNOOC Nexen Finance (2014) ULC, CNOOC Limited and The Bank of New York Mellon, incorporated by reference to Exhibit 4.3 to Post-Effective Amendment No. 1  to Form F-3 filed with the Securities and Exchange Commission on April 22, 2014 (File number: 333-188261)      
|2.13 | Form of 1.625% Guaranteed Note due 2017, incorporated by reference to Exhibit 4.2 to Form 6-K furnished with the Securities and Exchange Commission on May 1, 2014 (File number: 1-14966)                                                                                                         
|2.14 | Form of 4.250% Guaranteed Note due 2024, incorporated by reference to Exhibit 4.3 to Form 6-K furnished with the Securities and Exchange Commission on May 1, 2014 (File number: 1-14966)                                                                                                         
|2.15 | Form of 4.875% Guaranteed Note due 2044, incorporated by reference to Exhibit 4.4 to Form 6-K furnished with the Securities and Exchange Commission on May 1, 2014 (File number: 1-14966)                                                                                                         
|2.16 | Form of Indenture among CNOOC Finance (2015) Australia Pty Ltd, CNOOC Limited and The Bank of New York Mellon, incorporated by reference to Exhibit 4.5 to Post-Effective Amendment No.2  to Form F-3 filed with the Securities and Exchange Commission on April 27, 2015(File number: 333-188261)
|2.17 | Form of Indenture among CNOOC Finance (2015) U.S.A. LLC, CNOOC Limited and The Bank of New York Mellon, incorporated by reference to Exhibit 4.7 to Post-Effective Amendment No. 2 to Form F-3 filed with the Securities and Exchange Commission on April 27, 2015 (File number: 333-188261)      
|2.18 | Form of 2.625% Guaranteed Note due 2020, incorporated by reference to Exhibit 4.1 to Form 6-K furnished with the Securities and Exchange Commission on May 5, 2015 (File number: 1-14966)                                                                                                         
|2.19 | Form of 3.500% Guaranteed Note due 2025, incorporated by reference to Exhibit 4.2 to Form 6-K furnished with the Securities and Exchange Commission on May 5, 2015 (File number: 1-14966)                                                                                                         
|2.20 | Form of 4.200% Guaranteed Note due 2045, incorporated by reference to Exhibit 4.3 to Form 6-K furnished with the Securities and Exchange Commission on May 5, 2015 (File number: 1-14966)                                                                                                         
|4.1  | The Asset Swap Agreement dated July 20, 1999 between CNOOC and Offshore Oil Company Limited, incorporated by reference to Exhibit 10.1 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                      
|4.2  | The Asset Allocation Agreement dated July 20, 1999 between CNOOC and Offshore Oil Company Limited, incorporated by reference to Exhibit 10.2 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                
|4.3  | The Reorganization Agreement dated September 13, 1999 between CNOOC, Offshore Oil Company Limited and CNOOC Limited, incorporated by reference to Exhibit 10.3 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).              
|4.4  | Form of the Equity Transfer Agreement between CNOOC and CNOOC Limited, incorporated by reference to Exhibit 10.4 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                                            





3





|4.5  | Form of the Transfer Agreement dated October 1, 1999 between CNOOC and Offshore Oil Company Limited regarding the transfer of the rights and obligations of CNOOC under the 37 PSCs and one geophysical exploration agreement, incorporated by reference to Exhibit 10.5 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                                                                       
|---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.6  | Form of Equity Transfer Agreement between China Offshore Oil East China Sea Corporation and Offshore Oil Company Limited regarding the transfer of the rights and obligations under Joint Venture Contract of Shanghai Petroleum and Natural Gas Company Limited dated July 28, 1992 to Offshore Oil Company Limited, incorporated by reference to Exhibit 10.6 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).
|4.7  | Transfer Agreement dated September 9, 1999 between CNOOC and Offshore Oil Company Limited regarding the transfer of the rights and obligations of CNOOC under the Natural Gas Sale and Purchase Contract dated December 22, 1992 to Offshore Oil Company Limited, incorporated by reference to Exhibit 10.7 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                                    
|4.8  | Transfer Agreement dated September 9, 1999 between CNOOC and Offshore Oil Company Limited regarding the transfer of the rights and obligations of CNOOC under the Natural Gas Sale and Purchase Contract dated November 7, 1992 to Offshore Oil Company Limited, incorporated by reference to Exhibit 10.8 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                                     
|4.9  | Transfer Agreement dated September 9, 1999 among CNOOC, Offshore Oil Company Limited, the four PRC subsidiaries and CNOOC’s affiliates regarding the transfer of the rights and obligations of the technical services agreements to Offshore Oil Company Limited, incorporated by reference to Exhibit 10.9 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                                    
|4.10 | Nanshan Terminal Leasing Agreement dated September 9, 1999 between CNOOC, Hainan China Oil and Offshore Natural Gas Company and Offshore Oil Company Limited, incorporated by reference to Exhibit 10.10 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                                                                                                                                       
|4.11 | Trademark License Agreement dated September 9, 1999 between CNOOC, Offshore Oil Company Limited and CNOOC Limited, incorporated by reference to Exhibit 10.11 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                                                                                                                                                                                  
|4.12 | Trademark License Agreement dated September 9, 1999 between China Offshore Oil Marketing Company, CNOOC Limited and Offshore Oil Company Limited, incorporated by reference to Exhibit 10.12 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                                                                                                                                                   
|4.13 | Trademark License Agreement between CNOOC, CNOOC Limited and CNOOC China Limited, incorporated by reference to Exhibit 4.13 to our Annual Report on Form 20-F for fiscal year 2008 filed with the Securities and Exchange Commission (File Number: 1-14966).                                                                                                                                                                                                                         
|4.14 | Trademark License Agreement between CNOOC, CNOOC Limited and CNOOC China Limited, incorporated by reference to Exhibit 4.14 to our Annual Report on Form 20-F for fiscal year 2008 filed with the Securities and Exchange Commission (File Number: 1-14966).                                                                                                                                                                                                                         
|4.15 | Property Leasing Agreement dated September 9, 1999 between Wui
        Hai Enterprise Company Limited and Offshore Oil Company Limited in respect of the office premises at 6th, 7th
        and 8th Floors, CNOOC Plaza, No. 6 Dong Zhi Men Wai Xiao Jie, Beijing, incorporated by reference to Exhibit 10.18 to
        our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                         





4





|4.16 | Property Leasing Agreement dated September 9, 1999 between China Offshore Oil Western South China Sea Corporation and Offshore Oil Company Limited in respect of the office premises at 1st to 9th Floors, Nantiao Road, Potou District Zhangjiang, Guangdong, incorporated by reference to Exhibit 10.19 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                        
|---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.17 | Property Leasing Agreement dated September 9, 1999 between China Offshore Oil Bohai Corporation and Offshore Oil Company Limited in respect of the office premises at 1st to 7th Floors and 9th Floor, 2-37 He Kou Jie, Tanggu District, Tianjin, incorporated by reference to Exhibit 10.20 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                                     
|4.18 | Property Leasing Agreement dated September 9, 1999 between China Offshore Oil East China Sea Corporation and Offshore Oil Company Limited in respect of the office premises at 20th, 22nd and 23rd Floors, 583 Ling Ling Road, Shanghai, the PRC, incorporated by reference to Exhibit 10.21 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                                     
|4.19 | Property Leasing Agreement dated September 9, 1999 between China Offshore Oil Eastern South China Sea Corporation and Offshore Oil Company Limited in respect of the office premises at 3rd Floor and 6th to 11th Floors, 1 Second Industrial Road, Shekou, Shenzhen, the PRC, incorporated by reference to Exhibit 10.22 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                        
|4.20 | Property Leasing Agreement dated September 9, 1999 between China Offshore Oil Bohai Corporation and Offshore Oil Company Limited in respect of the Chengbei Warehouse, Chengbei Road, Tanggu District, Tianjin City, the PRC, incorporated by reference to Exhibit 10.23 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                                                         
|4.21 | Property Leasing Agreement dated September 9, 1999 between Overseas Oil & Gas Corporation, Ltd. and China Offshore Oil (Singapore) International Pte Ltd in respect of the residential premises at 10-01 and 17-002 Aquamarine Tower, 50 Bayshore Road, 13-05 Jade Tower, 60 Bayshore Road, Singapore, incorporated by reference to Exhibit 10.24 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).
|4.22 | Suizhong Pier Agreement dated September 9, 1999 between Offshore Oil Company Limited and China Offshore Bohai Corporation, incorporated by reference to Exhibit 10.25 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                                                                                                                                                            
|4.23 | Form of Novation Agreement among CNOOC, CNOOC China Limited, the Banks and other financial institution and the Fuji Bank Limited Hong Kong Branch, as agent, in respect of the transfer of the US$110 million syndicated loan, incorporated by reference to Exhibit 10.26 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                                                        
|4.24 | Form of the Undertaking Agreement between CNOOC and CNOOC Limited, incorporated by reference to Exhibit 10.27 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                                                                                                                                                                                                                    
|4.25 | Form of Pre-Global Offering Share Option Scheme for the Senior Management of CNOOC Limited, incorporated by reference to Exhibit 10.31 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                                                                                                                                                                                           
|4.26 | Form of Share Option Scheme for the Senior Management of CNOOC Limited, incorporated by reference to Exhibit 10.32 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                                                                                                                                                                                                               





5





|4.27 | CNOOC Limited Share Option Scheme adopted on December 31, 2005, incorporated by reference to Exhibit 4.37 to our Annual Report on Form 20-F for fiscal year 2005 filed with the Securities and Exchange Commission (File Number: 1-14966).                                                                                                                                                                                                                                                                                                                                                                                                                           
|---- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.28 | Subscription Agreement dated March 17, 2000 among CNOOC Limited, CNOOC (BVI) Limited, Overseas Oil & Gas Corporation, Ltd., et al., incorporated by reference to Exhibit 10.33 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                                                                                                                                                                                                                                                                                                                                                 
|4.29 | Subscription Agreement dated May 31, 2000 among CNOOC Limited, CNOOC (BVI) Limited, Overseas Oil & Gas Corporation, Ltd. and Hutchison International Limited, incorporated by reference to Exhibit 10.34 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                                                                                                                                                                                                                                                                                                                       
|4.30 | Subscription Agreement dated May 31, 2000 among CNOOC Limited, CNOOC (BVI) Limited, Overseas Oil & Gas Corporation, Ltd. and Hong Kong Electric Holdings Limited, incorporated by reference to Exhibit 10.35 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                                                                                                                                                                                                                                                                                                                   
|4.31 | Subscription Agreement dated June 28, 2000 among CNOOC Limited, CNOOC (BVI) Limited, Overseas Oil & Gas Corporation, Ltd., et al., incorporated by reference to Exhibit 10.36 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                                                                                                                                                                                                                                                                                                                                                  
|4.32 | Corporation Placing Agreement dated February 6, 2001 among CNOOC Limited, China National Offshore Oil Corporation, Shell Eastern Petroleum (Pte) Limited and Merrill Lynch Far East Limited, incorporated by reference to Exhibit 10.37 to our Registration Statement on Form F-1 filed with the Securities and Exchange Commission (File Number: 333-10862).                                                                                                                                                                                                                                                                                                        
|4.33 | Equity Transfer Agreement dated September 5, 2003 between CNOOC China Limited and CNOOC (Summary Translation), incorporated by reference to Exhibit 4.38 to our annual report on Form 20-F for fiscal year 2003 filed with the Securities and Exchange Commission (File Number: 1-14966).                                                                                                                                                                                                                                                                                                                                                                            
|4.34 | Framework Agreement dated April 8, 2004 with CNOOC Finance Corporation Limited (Summary Translation), incorporated by reference to Exhibit 4.39 to our annual report on Form 20-F for fiscal year 2003 filed with the Securities and Exchange Commission (File Number: 1-14966).                                                                                                                                                                                                                                                                                                                                                                                     
|4.35 | Framework Agreement dated December 8, 2005 with CNOOC (Summary Translation), incorporated by reference to Exhibit 4.45 to our Annual Report on Form 20-F for fiscal year 2005 filed with the Securities and Exchange Commission (File number: 1-14966).                                                                                                                                                                                                                                                                                                                                                                                                              
|4.36 | Framework Agreement dated December 8, 2005 with China Oilfield Services Limited (Summary Translation), incorporated by reference to Exhibit 4.46 to our Annual Report on Form 20-F for fiscal year 2005 filed with the Securities and Exchange Commission (File number: 1-14966).                                                                                                                                                                                                                                                                                                                                                                                    
|4.37 | Framework Agreement dated December 8, 2005 with Offshore Oil Engineering Co., Ltd. (Summary Translation), incorporated by reference to Exhibit 4.47 to our Annual Report on Form 20-F for fiscal year 2005 filed with the Securities and Exchange Commission (File number: 1-14966).                                                                                                                                                                                                                                                                                                                                                                                 
|4.38 | Sale and Purchase Agreement, dated January 8, 2006 between CNOOC Exploration & Production Limited and South Atlantic Petroleum Limited (certain statements, marked with an asterisk in brackets [*], have been omitted from this agreement pursuant to a request for confidential treatment pursuant to Rule 24b-2 under the Securities Exchange Act of 1934, as amended, and the omitted materials have been filed separately in paper form with the Securities and Exchange Commission), incorporated by reference to Exhibit 4.49 to our Annual Report on Form 20-F for fiscal year 2005 filed with the Securities and Exchange Commission (File number: 1-14966).





6





|4.39 | Framework Agreement dated November 8, 2007 with China BlueChemical Ltd. (Summary Translation), incorporated by reference to Exhibit 4.37 to our Annual Report on Form 20-F for fiscal year 2007 filed with the Securities and Exchange Commission (File number: 1-14966).                                                                                           
|---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|4.40 | Framework Agreement dated November 8, 2007 with CNOOC (Summary Translation), incorporated by reference to Exhibit 4.38 to our Annual Report on Form 20-F for fiscal year 2007 filed with the Securities and Exchange Commission (File number: 1-14966).                                                                                                             
|4.41 | Framework Agreement dated November 8, 2007 with China Oilfield Services Limited (Summary Translation), incorporated by reference to Exhibit 4.39 to our Annual Report on Form 20-F for fiscal year 2007 filed with the Securities and Exchange Commission (File number: 1-14966).                                                                                   
|4.42 | Framework Agreement dated November 8, 2007 with Offshore Oil Engineering Co., Ltd. (Summary Translation), incorporated by reference to Exhibit 4.40 to our Annual Report on Form 20-F for fiscal year 2007 filed with the Securities and Exchange Commission (File number: 1-14966).                                                                                
|4.43 | Framework Agreement dated November 1, 2010 with CNOOC (Summary Translation), incorporated by reference to Exhibit 4.43 to our Annual Report on Form 20-F for fiscal year 2010 filed with the Securities and Exchange Commission (File number: 1-14966).                                                                                                             
|4.44 | Arrangement Agreement dated July 23, 2012 among CNOOC Limited, CNOOC Canada Holding Ltd. and Nexen Inc., incorporated by reference to Exhibit 4.44 to our Annual Report on Form 20-F for fiscal year 2012 filed with the Securities and Exchange Commission (File number: 1-14966).                                                                                 
|4.45 | Framework Agreement dated November 6, 2013 with CNOOC (Summary Translation), incorporated by reference to Exhibit 4.45 to our Annual Report on Form 20-F for fiscal year 2014 filed with the Securities and Exchange Commission (File number: 1-14966).                                                                                                             
|4.46 | Framework Agreement dated November 15, 2016 with CNOOC (Summary Translation), incorporated by reference to Exhibit 4.46 to our Annual Report on Form 20-F for fiscal year 2016 filed with the Securities and Exchange Commission (File number: 1-14966).                                                                                                            
|4.47 | Framework Agreement dated December 1, 2016 with CNOOC Finance (Summary Translation), incorporated by reference to Exhibit 4.47 to our Annual Report on Form 20-F for fiscal year 2016 filed with the Securities and Exchange Commission (File number: 1-14966).                                                                                                     
|8.1  | List of Subsidiaries.*                                                                                                                                                                                                                                                                                                                                              
|10.1 | Letter from CNOOC Limited dated May 23, 2002 regarding receipt of certain representations from Arthur Andersen & Co pursuant to the requirements of the Securities and Exchange Commission, incorporated by reference to Exhibit 10 to our annual report on Form 20-F for fiscal year 2001 filed with the Securities and Exchange Commission (File Number: 1-14966).
|11.1 | Code of Ethics for Directors and Senior Officers, as amended in 2017.*                                                                                                                                                                                                                                                                                              
|12.1 | Certification by the Chief Executive Officer in accordance with Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                      
|12.2 | Certification by the Chief Financial Officer in accordance with Section 302 of the Sarbanes-Oxley Act of 2002.                                                                                                                                                                                                                                                      
|13.1 | Sarbanes-Oxley Act of 2002 Section 906 Certification furnished
    to (not filed with) the Securities and Exchange Commission.                                                                                                                                                                                                                                      
|15.1 | 2017 Reserves Reports of Ryder Scott Company, L.P.*                                                                                                                                                                                                                                                                                                                 
|15.2 | 2017 Reserves Reports of Gaffney, Cline & Associates (Consultants) Pte Ltd.*                                                                                                                                                                                                                                                                                        
|15.3 | 2017 Reserves Report of RPS*                                                                                                                                                                                                                                                                                                                                        
|15.4 | 2017 Reserves Audit Report of Ryder Scott Company, L.P.*                                                                                                                                                                                                                                                                                                            





7







|15.5  | 2017 Reserves Audit Report of McDaniel & Associates Consultants Ltd.*                                                                                                                            
|----- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|15.6  | 2017 Reserves Audit Report of DeGolyer and MacNaughton*                                                                                                                                          
|15.7  | Letter from Ernst & Young (incorporated by reference to Exhibit 15.7 of our Annual Report on Form 20-F (file No. 001-14966) filed with the Securities and Exchange Commission on April 17, 2014).
|15.8  | Consent from Ryder Scott Company, L.P.*                                                                                                                                                          
|15.9  | Consent from Gaffney, Cline & Associates (Consultants) Pte Ltd.*                                                                                                                                 
|15.10 | Consent from RPS*                                                                                                                                                                                
|15.11 | Consent from McDaniel & Associates Consultants Ltd.*                                                                                                                                             
|15.12 | Consent from DeGolyer and MacNaughton*                                                                                                                                                           



*Previously filed.



8











Signature



The registrant
hereby certifies that it meets all of the requirements for filing on Form 20-F/A and that it has duly caused and authorized the
undersigned to sign this Amendment No.1 to this annual report on its behalf.





|CNOOC Limited
|-------------
|             
|             
|By:          
|             
|             



Date: April 19, 2018





















CNOOC LIMITED



CONSOLIDATED FINANCIAL
STATEMENTS



FOR THE YEARS ENDED DECEMBER
31, 2015, 2016 AND 2017



TOGETHER WITH REPORT OF
INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



























































F-1





INDEX TO FINANCIAL STATEMENTS



|                                                                                                                                         | Page
|---------------------------------------------------------------------------------------------------------------------------------------- | ----
|                                                                                                                                         |     
|CNOOC LIMITED                                                                                                                            |     
|                                                                                                                                         |     
|Report of independent registered public accounting
    firm on financial statements for the years ended December 31, 2015, 2016 and 2017 | F-3 
|                                                                                                                                         |     
|Report of independent registered public accounting
    firm on internal control over financial reporting as of Decmeber 31, 2017         | F-4 
|                                                                                                                                         |     
|Consolidated statements of profit or loss and
    other comprehensive income for the years ended December 31, 2015, 2016 and 2017        | F-5 
|                                                                                                                                         |     
|Consolidated statements of financial position
    as of December 31, 2016 and 2017                                                       | F-6 
|                                                                                                                                         |     
|Consolidated statements of changes in equity for
    the years ended December 31, 2015, 2016 and 2017                                    | F-7 
|                                                                                                                                         |     
|Consolidated statements of cash flows for the
    years ended December 31, 2015, 2016 and 2017                                           | F-9 
|                                                                                                                                         |     
|Notes to the consolidated financial statements                                                                                           | F-10









F-2





REPORT OF INDEPENDENT REGISTERED
PUBLIC ACCOUNTING FIRM



To Shareholders and the Board of Directors
of CNOOC Limited



Opinion on the Financial Statements



We have audited the accompanying consolidated
statements of financial position of CNOOC Limited (the "Company") and subsidiaries (collectively referred to as "the
Group") as of December 31, 2017 and 2016, the related consolidated statements of profit or loss and other comprehensive income,
consolidated statements of changes in equity, and consolidated statements of cash flows, for each of the three years in the period
ended December 31, 2017, and the related notes (collectively referred to as the "financial statements"). In our opinion,
the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2017
and 2016, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2017,
in conformity with International Financial Reporting Standards issued by the International Accounting Standards Board and Hong
Kong Financial Reporting Standards issued by the Hong Kong Institute of Certified Public Accountants.



We have also audited, in accordance with
the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Group's internal control over financial
reporting as of December 31, 2017, based on criteria established in Internal Control — Integrated Framework (2013) issued
by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated March 29, 2018 expressed an unqualified
opinion on the Group's internal control over financial reporting.



Basis for Opinion



These financial statements are the responsibility
of the Company's management. Our responsibility is to express an opinion on the Company's financial statements based on our audits.
We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the
PCAOB.



We conducted our audits in accordance with
the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures
to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures
that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures
in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made
by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a
reasonable basis for our opinion.



/s/ Deloitte Touche Tohmatsu



Certified Public Accountants



Hong Kong



March 29, 2018



We have served as the Company's auditor since 2013.



F-3





REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To Shareholders and the Board of Directors of CNOOC Limited



Opinion on Internal Control over Financial
Reporting



We have audited the internal control over
financial reporting of CNOOC Limited (the "Company") and its subsidiaries (collectively referred to as the "Group")
as of December 31, 2017, based on criteria established in Internal Control — Integrated Framework (2013) issued by the Committee
of Sponsoring Organizations of the Treadway Commission (COSO). In our opinion, the Group maintained, in all material respects,
effective internal control over financial reporting as of December 31, 2017, based on criteria established in Internal Control
—Integrated Framework (2013) issued by COSO.



We have also audited, in accordance with
the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated financial statements as
of and for the year ended December 31, 2017 of the Group and our report dated March 29, 2018 expressed an unqualified opinion on
those financial statements.



Basis for Opinion



The Company’s management is responsible
for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control
over financial reporting, included in the accompanying "Management’s annual report on internal control over financial
reporting". Our responsibility is to express an opinion on the Group’s internal control over financial reporting based
on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the
Group in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange
Commission and the PCAOB.



We conducted our audit in accordance with
the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether
effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding
of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design
and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered
necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.



Definition and Limitations of Internal
Control over Financial Reporting



A company’s internal control over
financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and
the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s
internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records
that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide
reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with
generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with
authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely
detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the
financial statements.



Because of its inherent limitations, internal
control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness
to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree
of compliance with the policies or procedures may deteriorate.



/s/ Deloitte Touche Tohmatsu



Certified Public Accountants



Hong Kong



March 29, 2018



F-4





CNOOC
LIMITED



CONSOLIDATED
STATEMENTS OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME



FOR
THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017



(All
amounts expressed in millions of Renminbi/US$, except per share data)



|                                                                                                       |  | Notes |          | 2015 RMB |  | 2016 RMB |          | 2017 RMB |  | 2017 US$
|------------------------------------------------------------------------------------------------------ |  | ----- | -------- | -------- |  | -------- | -------- | -------- |  | --------
|                                                                                                       |  |       |          | million 
|REVENUE                                                                                                |  |       |          |          |  |          |          |          |  |         
|Oil and gas sales                                                                                      |  |       | 4        |          |  |          | 146,597  |          |  |         
|Marketing revenues                                                                                     |  |       |          |          |  |          | 21,422   |          |  |         
|Other income                                                                                           |  |       |          |          |  |          | 3,418    |          |  |         
|                                                                                                       |  |       |          |          |  |          | 171,437  |          |  |         
|                                                                                                       |  |       |          |          |  |          |          |          |  |         
|EXPENSES                                                                                               |  |       |          |          |  |          |          |          |  |         
|Operating expenses                                                                                     |  |       |          |          |  |          | (28,372  | )        |  |         
|Taxes other than income tax                                                                            |  |       | 10(ii)   |          |  |          | (10,770  | )        |  |         
|Exploration expenses                                                                                   |  |       |          |          |  |          | (9,900   | )        |  |         
|Depreciation, depletion and amortization                                                               |  |       | 6        |          |  |          | (73,439  | )        |  |         
|Special oil gain levy                                                                                  |  |       | 10 (iii) |          |  |          | (59      | )        |  |         
|Impairment and provision                                                                               |  |       | 6, 13    |          |  |          | (2,746   | )        |  |         
|Crude oil and product purchases                                                                        |  |       |          |          |  |          | (19,840  | )        |  |         
|Selling and administrative expense                                                                     |  |       |          |          |  |          | (5,705   | )        |  |         
|Others                                                                                                 |  |       |          |          |  |          | (3,150   | )        |  |         
|                                                                                                       |  |       |          |          |  |          | (153,981 | )        |  |         
|                                                                                                       |  |       |          |          |  |          |          |          |  |         
|PROFIT/(LOSS) FROM OPERATING ACTIVITIES                                                                |  |       |          |          |  |          | 17,456   |          |  |         
|                                                                                                       |  |       |          |          |  |          |          |          |  |         
|Interest income                                                                                        |  |       | 6        |          |  |          | 873      |          |  |         
|Finance costs                                                                                          |  |       | 7        |          |  |          | (6,118   | )        |  |         
|Exchange (losses)/gains, net                                                                           |  |       |          |          |  |          | (143     | )        |  |         
|Investment income                                                                                      |  |       | 6        |          |  |          | 2,398    |          |  |         
|Share of profits/(losses) of associates                                                                |  |       | 15       |          |  |          | 256      |          |  |         
|Share of profit of a joint venture                                                                     |  |       |          |          |  |          | 1,647    |          |  |         
|Non-operating income, net                                                                              |  |       |          |          |  |          | 761      |          |  |         
|PROFIT/(LOSS) BEFORE TAX                                                                               |  |       | 6        |          |  |          | 17,130   |          |  |         
|Income tax credit/(expense)                                                                            |  |       | 10(i)    |          |  |          | 3,116    |          |  |         
|PROFIT FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE PARENT                                               |  |       |          |          |  |          | 20,246   |          |  |         
|                                                                                                       |  |       |          |          |  |          |          |          |  |         
|OTHER COMPREHENSIVE INCOME/(EXPENSE)                                                                   |  |       |          |          |  |          |          |          |  |         
|Items that may be subsequently reclassified to profit or loss                                          |  |       |          |          |  |          |          |          |  |         
|Exchange differences on translation of foreign operations                                              |  |       |          |          |  |          | 7,979    |          |  |         
|Share of other comprehensive income/(expense) of  associates                                           |  |       |          |          |  |          | 74       |          |  |         
|Other items that will not be reclassified to profit or loss                                            |  |       |          |          |  |          |          |          |  |         
|Fair value change on equity investments designated as at fair value through other comprehensive income |  |       | 17(ii)   |          |  |          | (1,573   | )        |  |         
|Others                                                                                                 |  |       |          |          |  |          | 134      |          |  |         
|                                                                                                       |  |       |          |          |  |          |          |          |  |         
|OTHER COMPREHENSIVE INCOME/(EXPENSE) FOR THE YEAR, NET OF TAX                                          |  |       |          |          |  |          | 6,614    |          |  |         
|TOTAL COMPREHENSIVE INCOME FOR THE YEAR ATTRIBUTABLE TO OWNERS OF THE PARENT                           |  |       |          |          |  |          | 26,860   |          |  |         
|                                                                                                       |  |       |          |          |  |          |          |          |  |         
|EARNINGS PER SHARE ATTRIBUTABLE TO OWNERS OF THE PARENT                                                |  |       |          |          |  |          |          |          |  |         
|Basic (RMB Yuan)                                                                                       |  |       | 11       |          |  |          | 0.45     |          |  |         
|Diluted (RMB Yuan)                                                                                     |  |       | 11       |          |  |          | 0.45     |          |  |         



The
accompanying notes are an integral part of these financial statements.



F-5





CNOOC
LIMITED



CONSOLIDATED
STATEMENTS OF FINANCIAL POSITION



AS
OF DECEMBER 31, 2016 AND 2017



(All
amounts expressed in millions of Renminbi/US$)



|                                             |  |       |        | 2016    |  | 2017 |         | 2017
|-------------------------------------------- |  | ----- | ------ | ------- |  | ---- | ------- | ----
|                                             |  | Notes |        | RMB     |  | RMB  |         | US$ 
|                                             |  |       |        | million
|NON-CURRENT ASSETS                           |  |       |        |         |  |      |         |     
|Property, plant and equipment                |  |       | 13     |         |  |      | 432,465 |     
|Intangible assets                            |  |       | 14     |         |  |      | 16,644  |     
|Investments in associates                    |  |       | 15     |         |  |      | 3,695   |     
|Investment in a joint venture                |  |       | 16     |         |  |      | 26,300  |     
|Equity investments                           |  |       | 17, 32 |         |  |      | 4,266   |     
|Deferred tax assets                          |  |       | 10(i)  |         |  |      | 24,844  |     
|Other non-current assets                     |  |       | 18     |         |  |      | 7,422   |     
|Total non-current assets                     |  |       |        |         |  |      | 515,636 |     
|CURRENT ASSETS                               |  |       |        |         |  |      |         |     
|Inventories and supplies                     |  |       | 19     |         |  |      | 8,709   |     
|Trade receivables                            |  |       | 20     |         |  |      | 10,199  |     
|Due from related companies                   |  |       |        |         |  |      | 13,263  |     
|Derivative financial assets                  |  |       | 32     |         |  |      | 428     |     
|Equity investments                           |  |       | 17, 32 |         |  |      | 15      |     
|Other financial assets                       |  |       | 17, 32 |         |  |      | 52,889  |     
|Other current asset                          |  |       |        |         |  |      | 5,977   |     
|Time deposits with maturity over three month |  |       | 21     |         |  |      | 16,830  |     
|Cash and cash equivalent                     |  |       | 21     |         |  |      | 13,735  |     
|Total current assets                         |  |       |        |         |  |      | 122,045 |     
|CURRENT LIABILITIES                          |  |       |        |         |  |      |         |     
|Loans and borrowings                         |  |       | 24     |         |  |      | 14,867  |     
|Borrowings from the parent company           |  |       | 28     |         |  |      | 4,811   |     
|Trade and accrued payables                   |  |       | 22     |         |  |      | 10,254  |     
|Due to the parent company                    |  |       | 28     |         |  |      | 215     |     
|Due to related companies                     |  |       | 28     |         |  |      | 15,091  |     
|Derivative financial liabilities             |  |       | 32     |         |  |      | 426     |     
|Other payables and accrued liabilities       |  |       | 23     |         |  |      | 14,651  |     
|Taxes payable                                |  |       |        |         |  |      | 6,775   |     
|                                             |  |       |        |         |  |      |         |     
|Total current liabilities                    |  |       |        |         |  |      | 67,090  |     
|NET CURRENT ASSETS                           |  |       |        |         |  |      | 54,955  |     
|TOTAL ASSETS LESS CURRENT LIABILITIES        |  |       |        |         |  |      | 570,591 |     
|NON-CURRENT LIABILITIES                      |  |       |        |         |  |      |         |     
|Loans and borrowings                         |  |       | 24     |         |  |      | 130,798 |     
|Provision for dismantlement                  |  |       | 25     |         |  |      | 50,426  |     
|Deferred tax liabilities                     |  |       | 10(i)  |         |  |      | 5,670   |     
|Other non-current liabilities                |  |       |        |         |  |      | 1,326   |     
|Total non-current liabilities                |  |       |        |         |  |      | 188,220 |     
|Net assets                                   |  |       |        |         |  |      | 382,371 |     
|EQUITY                                       |  |       |        |         |  |      |         |     
|Equity attributable to owners of the parent  |  |       |        |         |  |      |         |     
|Issued capital                               |  |       | 26     |         |  |      | 43,081  |     
|Reserves                                     |  |       | 27     |         |  |      | 339,290 |     
|Total equity                                 |  |       |        |         |  |      | 382,371 |     

The accompanying notes
are an integral part of these financial statements.



F-6





CNOOC
LIMITED



CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY



FOR
THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017



(All
amounts expressed in millions of Renminbi)



|                                                        |  | Issued capital |        | Cumulative translation reserve |  | Statutory and non- distributable reserves |         | Other reserves |  | Retained earnings |        | Proposed final dividend |  | Total
|------------------------------------------------------- |  | -------------- | ------ | ------------------------------ |  | ----------------------------------------- | ------- | -------------- |  | ----------------- | ------ | ----------------------- |  | -----
|                                                        |  |                |        |                                |  |                                           |         |                |  |                   |        |                         |  |      
|Balance at January 1, 2015                              |  |                | 43,081 |                                |  |                                           | (20,918 | )              |  |                   | 20,000 |                         |  |      
|                                                        |  |                |        |                                |  |                                           |         |                |  |                   |        |                         |  |      
|Profit for the year                                     |  |                | -      |                                |  |                                           | -       |                |  |                   | -      |                         |  |      
|Other comprehensive income/(expense), net of income tax |  |                | -      |                                |  |                                           | 7,979   |                |  |                   | -      |                         |  |      
|Total comprehensive income/(expense)                    |  |                | -      |                                |  |                                           | 7,979   |                |  |                   | -      |                         |  |      
|2014 final dividend                                     |  |                | -      |                                |  |                                           | -       |                |  |                   | -      |                         |  |      
|2015 interim dividend                                   |  |                | -      |                                |  |                                           | -       |                |  |                   | -      |                         |  |      
|Proposed 2015 final dividend                            |  |                | -      |                                |  |                                           | -       |                |  |                   | -      |                         |  |      
|                                                        |  |                |        |                                |  |                                           |         |                |  |                   |        |                         |  |      
|Balance at December 31, 2015                            |  |                | 43,081 |                                |  |                                           | (12,939 | )*             |  |                   | 20,000 | *                       |  |      
|                                                        |  |                |        |                                |  |                                           |         |                |  |                   |        |                         |  |      
|Balance at January 1, 2016                              |  |                | 43,081 |                                |  |                                           | (12,939 | )              |  |                   | 20,000 |                         |  |      
|                                                        |  |                |        |                                |  |                                           |         |                |  |                   |        |                         |  |      
|Profit for the year                                     |  |                | -      |                                |  |                                           | -       |                |  |                   | -      |                         |  |      
|Other comprehensive income/(expense), netof income tax  |  |                | -      |                                |  |                                           | 10,422  |                |  |                   | -      |                         |  |      
|Total comprehensive income/(expense)                    |  |                | -      |                                |  |                                           | 10,422  |                |  |                   | -      |                         |  |      
|2015 final dividend                                     |  |                | -      |                                |  |                                           | -       |                |  |                   | -      |                         |  |      
|2016 interim dividend                                   |  |                | -      |                                |  |                                           | -       |                |  |                   | -      |                         |  |      
|Proposed 2016 final dividend                            |  |                | -      |                                |  |                                           | -       |                |  |                   | -      |                         |  |      
|                                                        |  |                |        |                                |  |                                           |         |                |  |                   |        |                         |  |      
|Balance at December 31, 2016                            |  |                | 43,081 |                                |  |                                           | (2,517  | )*             |  |                   | 20,000 | *                       |  |      

F-7





CNOOC
LIMITED



CONSOLIDATED
STATEMENTS OF CHANGES IN EQUITY



FOR
THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017 (continued)



(All
amounts expressed in millions of Renminbi)



|                                               |  | Issued capital |        | Cumulative translation reserve |  | Statutory and non-distributable reserves |         | Other reserves |  | Retained earnings |        | Proposed final dividend |  | Total
|---------------------------------------------- |  | -------------- | ------ | ------------------------------ |  | ---------------------------------------- | ------- | -------------- |  | ----------------- | ------ | ----------------------- |  | -----
|                                               |  |                |        |                                |  |                                          |         |                |  |                   |        |                         |  |      
|Balance at January 1, 2017                     |  |                | 43,081 |                                |  |                                          | (2,517  | )              |  |                   | 20,000 |                         |  |      
|                                               |  |                |        |                                |  |                                          |         |                |  |                   |        |                         |  |      
|Profit for the year                            |  |                | -      |                                |  |                                          | -       |                |  |                   | -      |                         |  |      
|Other comprehensive expense, net of income tax |  |                | -      |                                |  |                                          | (10,121 | )              |  |                   | -      |                         |  |      
|Total comprehensive (expense)/income           |  |                | -      |                                |  |                                          | (10,121 | )              |  |                   | -      |                         |  |      
|2016 final dividend                            |  |                | -      |                                |  |                                          | -       |                |  |                   | -      |                         |  |      
|2017 interim dividend                          |  |                | -      |                                |  |                                          | -       |                |  |                   | -      |                         |  |      
|Proposed 2017 final dividend                   |  |                | -      |                                |  |                                          | -       |                |  |                   | -      |                         |  |      
|Appropriation to reserve**                     |  |                | -      |                                |  |                                          | -       |                |  |                   | 50,000 |                         |  |      
|                                               |  |                |        |                                |  |                                          |         |                |  |                   |        |                         |  |      
|Balance at December 31, 2017                   |  |                | 43,081 |                                |  |                                          | (12,638 | )*             |  |                   | 70,000 | *                       |  |      












| | * | These reserve accounts constitute the consolidated reserves of approximately RMB336,894
million (December 31, 2016: RMB339,290 million ) in the consolidated statement of financial position.
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | ** | During the year ended December 31, 2017 , CNOOC China Limited (the "CNOOC China"),
the Company’s wholly-owned subsidiary, appropriated RMB50,000 million of the general reserve fund.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
accompanying notes are an integral part of these financial statements.



F-8





CNOOC
LIMITED



CONSOLIDATED
STATEMENTS OF CASH FLOWS



FOR
THE YEARS ENDED DECEMBER 31, 2015, 2016 AND 2017



(All
amounts expressed in millions of Renminbi/US$)



|                                                          |  | Notes   |    | 2015 RMB |  | 2016 RMB |          | 2017 RMB |  | 2017 US$
|--------------------------------------------------------- |  | ------- | -- | -------- |  | -------- | -------- | -------- |  | --------
|                                                          |  | million
|CASH FLOWS FROM OPERATING ACTIVITIES                      |  |         |    |          |  |          |          |          |  |         
|Cash generated from operations                            |  |         | 30 |          |  |          | 96,095   |          |  |         
|Income taxes paid                                         |  |         |    |          |  |          | (16,000  | )        |  |         
|                                                          |  |         |    |          |  |          |          |          |  |         
|Net cash flows from operating activities                  |  |         |    |          |  |          | 80,095   |          |  |         
|                                                          |  |         |    |          |  |          |          |          |  |         
|CASH FLOWS FROM INVESTING ACTIVITIES                      |  |         |    |          |  |          |          |          |  |         
|Capital expenditure                                       |  |         |    |          |  |          | (67,674  | )        |  |         
|Additions to investments in associates                    |  |         |    |          |  |          | (9       | )        |  |         
|Decrease in time deposits with maturity over three months |  |         |    |          |  |          | 4,825    |          |  |         
|Dividends received from an associate                      |  |         |    |          |  |          | 164      |          |  |         
|Dividends received from a joint venture                   |  |         |    |          |  |          | 32       |          |  |         
|Interest received                                         |  |         |    |          |  |          | 812      |          |  |         
|Investment income received                                |  |         |    |          |  |          | 2,177    |          |  |         
|Purchase of other financial assets                        |  |         |    |          |  |          | (122,030 | )        |  |         
|Purchase of equity investments                            |  |         |    |          |  |          | (236     | )        |  |         
|Proceeds from sale of other financial assets              |  |         |    |          |  |          | 104,900  |          |  |         
|Proceeds from disposal of property, plant and equipment   |  |         |    |          |  |          | 544      |          |  |         
|Proceeds from disposal of an associate                    |  |         |    |          |  |          | -        |          |  |         
|Net cash flows used in investing activities               |  |         |    |          |  |          | (76,495  | )        |  |         
|                                                          |  |         |    |          |  |          |          |          |  |         
|CASH FLOWS FROM FINANCING ACTIVITIES                      |  |         |    |          |  |          |          |          |  |         
|Proceeds from issuance of guaranteed notes                |  |         |    |          |  |          | 23,184   |          |  |         
|Repayment of guaranteed notes                             |  |         |    |          |  |          | (789     | )        |  |         
|Proceeds from bank loans                                  |  |         |    |          |  |          | 20,541   |          |  |         
|Repayment of bank loans                                   |  |         |    |          |  |          | (24,127  | )        |  |         
|Dividends paid                                            |  |         |    |          |  |          | (20,419  | )        |  |         
|Interest paid                                             |  |         |    |          |  |          | (5,283   | )        |  |         
|                                                          |  |         |    |          |  |          |          |          |  |         
|Net cash flows used in financing activities               |  |         |    |          |  |          | (6,893   | )        |  |         
|                                                          |  |         |    |          |  |          |          |          |  |         
|NET (DECREASE)/INCREASE IN CASH AND CASH EQUIVALENTS      |  |         |    |          |  |          | (3,293   | )        |  |         
|Cash and cash equivalents at beginning of year            |  |         |    |          |  |          | 14,918   |          |  |         
|Effect of foreign exchange rate changes, net              |  |         |    |          |  |          | 242      |          |  |         
|                                                          |  |         |    |          |  |          |          |          |  |         
|CASH AND CASH EQUIVALENTS AT END OF YEAR                  |  |         | 21 |          |  |          | 11,867   |          |  |         



The
accompanying notes are an integral part of these financial statements.



F-9









CNOOC
LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)





| | 1. | CORPORATE
                                         INFORMATION
| | -- | --------------------------------------------------------------



CNOOC Limited
(the "Company") was incorporated in the Hong Kong Special Administrative Region ("Hong Kong") of the People's
Republic of China (the "PRC") on August 20, 1999 to hold the interests in certain entities thereby creating a group
comprising the Company and its subsidiaries (hereinafter collectively referred to as the "Group"). During the year,
the Group was principally engaged in the exploration, development, production and sale of crude oil, natural gas and other petroleum
products.



The
registered office address of the Company is 65/F, Bank of China Tower, 1 Garden Road, Hong Kong.



In
the opinion of the directors of the Company (the "Directors"), the parent and the ultimate holding company of the Company
is China National Offshore Oil Corporation ("CNOOC"), a company established in the PRC. In November 2017, CNOOC changed
its registered company name which is registered in Chinese pursuant to relevant laws and regulations of China to "中國海洋石油集團有限公司".



Particulars
of the principal subsidiaries at the end of the reporting period are as follows:



|Name
of entity                                       | Place
of
establishment | Nominal
value of ordinary shares
issued and paid-up/
registered capital | Percentage
of equity
attributable
to the Group | Principal
activities                                                                                                                                                             
|---------------------------------------------------- | ---------------------- | ----------------------------------------------------------------------- | ---------------------------------------------- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|Directly held subsidiaries:                          |                        |                                                                         |                                                |                                                                                                                                                                                  
|CNOOC China Limited                                  | Tianjin, PRC           | RMB20 billion                                                           | 100%                                           | Offshore petroleum exploration, development, production and sales, and shale gas exploration in the PRC                                                                          
|China Offshore Oil (Singapore) International Pte Ltd | Singapore              | SG$3 million                                                            | 100%                                           | Sales and marketing of petroleum products outside the PRC                                                                                                                        
|CNOOC International Limited                          | British Virgin Islands | US$20,000,000,002                                                       | 100%                                           | Investment holding                                                                                                                                                               
|CNOOC Finance (2003) Limited                         | British Virgin Islands | US$1,000                                                                | 100%                                           | Bond issuance                                                                                                                                                                    
|CNOOC Finance (2011) Limited                         | British Virgin Islands | US$1,000                                                                | 100%                                           | Bond issuance                                                                                                                                                                    
|CNOOC Finance (2012) Limited                         | British Virgin Islands | US$1,000                                                                | 100%                                           | Bond issuance                                                                                                                                                                    
|CNOOC Finance (2013) Limited                         | British Virgin Islands | US$1,000                                                                | 100%                                           | Bond issuance                                                                                                                                                                    
|                                                     |                        |                                                                         |                                                |                                                                                                                                                                                  
|Indirectly held subsidiaries(1):                     |                        |                                                                         |                                                |                                                                                                                                                                                  
|CNOOC Deepwater Development Limited                  | Zhuhai, PRC            | RMB20.3 billion                                                         | 100%                                           | Deepwater and low-grade oil and gas fields exploitation in the PRC and exploration, development, production and sales of oil and gas in the oil and gas fields of South China Sea
|CNOOC Southeast Asia Limited                         | Bermuda                | US$12,000                                                               | 100%                                           | Investment holding                                                                                                                                                               
|CNOOC SES Ltd.                                       | Malaysia               | US$1                                                                    | 100%                                           | Petroleum exploration, development and production in Indonesia                                                                                                                   
|CNOOC Muturi Limited                                 | Isle of Man            | US$7,780,770                                                            | 100%                                           | Petroleum exploration, development and production in Indonesia                                                                                                                   
|CNOOC NWS Private Limited                            | Singapore              | SG$2                                                                    | 100%                                           | Offshore petroleum exploration,  development and production in Australia                                                                                                         
|CNOOC Exploration & Production Nigeria Limited       | Nigeria                | NGN10 million                                                           | 100%                                           | Petroleum exploration, development and production in Africa                                                                                                                      

F-10





CNOOC
LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 1. | CORPORATE
                                         INFORMATION (continued)
| | -- | --------------------------------------------------------------------------



|Name
of entity                               | Place
of
establishment | Nominal
value of ordinary shares
issued and paid-up/
registered capital            | Percentage
of equity
attributable
to the Group | Principal
activities                                                               
|-------------------------------------------- | ---------------------- | ---------------------------------------------------------------------------------- | ---------------------------------------------- | -----------------------------------------------------------------------------------
|Indirectly held subsidiaries (continued)(1): |                        |                                                                                    |                                                |                                                                                    
|CNOOC Iraq Limited                           | British Virgin Islands | US$1                                                                               | 100%                                           | Providing services of petroleum exploration and development in the Republic of Iraq
|CNOOC Canada Energy Ltd.                     | Canada                 | 100 common shares without a par value 103,000 preferred shares without a par value | 100%                                           | Oil sands exploration,   development and production in Canada                      
|CNOOC Uganda Ltd                             | Uganda                 | 1 million Uganda Shilling                                                          | 100%                                           | Petroleum exploration, development and production in Africa                        
|Nexen Energy ULC                             | Canada                 | 13,671,421,700 common shares without a par value                                   | 100%                                           | Petroleum exploration, development and production in Canada                        
|Nexen Petroleum U.K. Limited                 | England and Wales      | GBP98,009,131                                                                      | 100%                                           | Petroleum exploration, development and production in the UK                        
|Nexen Petroleum Nigeria Limited              | Nigeria                | NGN30 million                                                                      | 100%                                           | Petroleum exploration, development and production in Nigeria                       
|OOGC America LLC                             | USA                    | N/A                                                                                | 100%                                           | Petroleum exploration, development and production in the USA                       
|Nexen Petroleum Offshore U.S.A. Inc.         | USA                    | US$15,830                                                                          | 100%                                           | Petroleum exploration, development and production in the USA                       
|Nexen Oil Sands Partnership                  | Canada                 | N/A                                                                                | 100%                                           | Petroleum exploration, development and production in Canada                        
|CNOOC PETROLEUM BRASIL LTDA(2)               | Brazil                 | R$2,965,600,000                                                                    | 100%                                           | Petroleum exploration, development and production in Brazil                        
|CNOOC Nexen Finance (2014) ULC               | Canada                 | 100 common shares without a par value                                              | 100%                                           | Bond issuance                                                                      
|CNOOC Finance (2015) U.S.A. LLC              | USA                    | N/A                                                                                | 100%                                           | Bond Issuance                                                                      
|CNOOC Finance (2015) Australia Pty Ltd       | Australia              | US$1                                                                               | 100%                                           | Bond Issuance                                                                      












| | (1) | All subsidiaries are indirectly held through CNOOC International Limited, except CNOOC Deepwater Development Limited which
is indirectly held through CNOOC China Limited.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | The registered capital of CNOOC PETROLEUM BRASIL LTDA increased from R$2,436,000,000 to R$2,965,600,000 on 20 June 2017.
| | --- | ------------------------------------------------------------------------------------------------------------------------



The above table lists the subsidiaries
of the Company which, in the opinion of the Directors, principally affected the results for the year or formed a substantial portion
of the total assets of the Group. To give details of other subsidiaries would, in the opinion of the Directors, result in particulars
of excessive length.



F-11





CNOOC
LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 2.1 | STATEMENT
                                         OF COMPLIANCE
| | --- | ----------------------------------------------------------------



These financial statements
have been prepared in accordance with International Financial Reporting Standards ("IFRSs") issued by the International
Accounting Standards Board (the "IASB"), Hong Kong Financial Reporting Standards
("HKFRSs") issued by the Hong Kong Institute of Certified Public Accountants (the "HKICPA"), the Rules Governing
the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules") and the Hong Kong Companies
Ordinance (Cap. 622). A summary of the significant accounting policies adopted by the Group is set out below.



| | 2.2 | CHANGES IN ACCOUNTING POLICY AND DISCLOSURES
| | --- | --------------------------------------------



The
IASB has issued a number of new and revised IFRSs that are first effective for the current accounting year commencing January 1,
2017 or later but available for early adoption. The equivalent new and revised HKFRSs consequently issued by the HKICPA have the
same effective dates as those issued by the IASB and are in all material aspects identical to the pronouncements issued by the
IASB.



The
accounting policies adopted are consistent with those of the year ended December 31, 2016, except for the first time adoption of
the amendments to IFRSs/HKFRSs effective for the Group’s financial year beginning on January 1, 2017. The adoption of the
amendments had no material impact on the accountingpolicies, the disclosures or the
amounts recognized in the consolidated financial statements of the Group. IFRS 9/HKFRS 9 (2009) Financial Instruments has been
early adopted by the Company from year 2015.



The Group has not applied the
following new and revised IFRSs/HKFRSs, which may be relevant to the Group and have been issued but are not yet effective, in these
consolidated financial statements:



|IFRS 9/HKFRS 9                 | Financial Instruments1                         
|------------------------------ | -----------------------------------------------
|IFRS 15/ HKFRS 15              | Revenue from Contracts with Customers and the  
|                               | related Amendments 1                           
|IFRS 16/HKFRS 16               | Leases2                                        
|IFRS 17/HKFRS 17               | Insurance Contracts4                           
|IFRIC 22/HK(IFRIC)-Int 22      | Foreign Currency Transactions and Advance      
|                               | Consideration1                                 
|IFRIC 23/HK(IFRIC)-Int 23      | Uncertainty over Income Tax Treatments2        
|Amendments to IFRS 2/HKFRS 2   | Classification and Measurement of Share-based  
|                               | Payment Transactions1                          
|Amendments to IFRS 4/HKFRS 4   | Applying IFRS 9/HKFRS 9 Financial Instruments  
|                               | with IFRS 4/HKFRS 4 Insurance Contracts1       
|Amendments to IFRS 9/HKFRS 9   | Prepayment Features with Negative Compensation2
|Amendments to IFRS 10/HKFRS 10 | Sale or Contribution of Assets between an      
|and IAS 28/HKAS 28             | Investor and its Associate or Joint Venture3   
|Amendments to IAS 19           | Plan Amendment, Curtailment or Settlement2     
|Amendments to IAS 28/HKAS 28   | Long-term Interests in Associates and Joint    
|                               | Ventures2                                      
|Amendments to IAS 28/HKAS 28   | As part of the Annual Improvements to IFRS     
|                               | Standards/HKFRSs 2014-2016 Cycle1              
|Amendments to IAS 40/HKAS 40   | Transfers of Investment Property1              
|Amendments to IFRSs/HKFRSs     | Annual Improvements to IFRS Standards/         
|                               | HKFRSs 2015-2017 Cycle2                        



| | 1. | Effective for annual periods beginning on or after 1 January 2018, except for the 2009 version
of IFRS 9/HKFRS 9, which the Group adopted in advance
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------



| | 2. | Effective for annual periods beginning on or after 1 January 2019
| | -- | -----------------------------------------------------------------



| | 3. | Effective for annual periods beginning on or after a date to be determined
| | -- | --------------------------------------------------------------------------



| | 4. | Effective for annual periods beginning on or after 1 January 2021
| | -- | -----------------------------------------------------------------



F-12





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 2.2 | CHANGES IN ACCOUNTING
                                         POLICY AND DISCLOSURES (continued)
| | --- | -------------------------------------------------------------------------------------------------



IFRS 15/HKFRS 15 Revenue from
Contracts with Customers



IFRS 15/HKFRS 15 Revenue from
Contracts with Customers provides a single model for accounting for revenue arising from contracts with customers, focusing on
the identification and satisfaction of performance obligations, and is effective for annual periods beginning on or after 1 January
2018. IFRS 15/HKFRS 15 will supersede IAS 18/HKAS 18 Revenue.



The Company expects to adopt
the new revenue standard as of 1 January 2018 using the modified retrospective transition method. Based on our assessment, the
Company does not expect the implementation of the standard to have a material effect on its consolidated financial statements.



IFRS 16/HKFRS 16 Leases



IFRS 16/HKFRS 16, which upon
the effective date will supersede IAS 17/HKAS 17 Leases, introduces a single lessee accounting model and requires a lessee to recognize
assets and liabilities for all leases with a term of more than 12 months, unless the underlying asset is of low value. Specifically,
under IFRS 16/HKFRS 16, a lessee is required to recognize a right-of-use asset representing its right to use the underlying leased
asset and a lease liability representing its obligation to make lease payments. Accordingly, a lessee should recognize depreciation
of the right-of-use asset and interest on the lease liability, and also classify cash payments of the lease liability into a principal
portion and an interest portion and present them in the consolidated statement of cash flows. Also, the right-of-use asset and
the lease liability are initially measured on a present value basis. The measurement includes non-cancellable lease payments and
also includes payments to be made in optional periods if the lessee is reasonably certain to exercise an option to extend the lease,
or not to exercise an option to terminate the lease. This accounting treatment is significantly different from the lessee accounting
for leases that are classified as operating leases under IAS 17/HKAS 17.



In respect of the lessor accounting,
IFRS 16/HKFRS 16 substantially carries forward the lessor accounting requirements in IAS 17/HKAS 17. Accordingly, a lessor continues
to classify its leases as operating leases or finance leases, and to account for these two types of leases differently.



The Group is in the process
of assessing the impact of application of IFRS 16/HKFRS 16. For the moment, it is not practicable to provide a reasonable estimate
of the effect of the application of IFRS 16/HKFRS 16 until the Group completes a detail review.



The Group anticipates that the
application of other new and revised IFRSs/HKFRSs that have been issued but are not yet effective will have no material effect
on the Group’s consolidated financial statements.



F-13





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 3. | SUMMARY
                                         OF SIGNIFICANT ACCOUNTING POLICIES
| | -- | -----------------------------------------------------------------------------------



Basis of preparation



These consolidated financial
statements have been prepared under the historical cost convention, except for as detailed in the accounting policies notes hereafter.
These consolidated financial statements are presented in Renminbi ("RMB") and all values are rounded to the nearest million
except when otherwise indicated.



Basis of consolidation



The consolidated financial statements
include the financial statements of the Company and its subsidiaries for the year ended December 31, 2017.



The results of subsidiaries
are consolidated from the date of acquisition, being the date on which the Group obtains control, and continue to be consolidated
until the date that such control ceases. The financial statements of the subsidiaries are prepared for the same reporting period
as the parent company, using consistent accounting policies.



The results of subsidiaries
are included in the Company's statement of profit or loss and other comprehensive income to the extent of dividends received and
receivable. The Company's interests in subsidiaries are stated at cost less any impairment losses.



All intra-group balances, income
and expenses and unrealized gains and losses and dividends resulting from intra-group transactions are eliminated in full.



F-14





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 3. | SUMMARY
                                         OF SIGNIFICANT ACCOUNTING POLICIES (continued)
| | -- | -----------------------------------------------------------------------------------------------



Business combinations
and goodwill



Business combinations are accounted
for using the acquisition method. The consideration transferred is measured at acquisition date fair value which is the sum of
the acquisition date fair values of assets transferred by the Group, liabilities assumed by the Group to the former owners of the
acquiree and the equity interests issued by the Group in exchange for control of the acquiree. For each business combination, the
Group elects whether it measures the non-controlling interests in the acquiree either at fair value or at the proportionate share
of the acquiree's identifiable net assets. All other components of non-controlling interests are measured at fair value. Acquisition
related costs incurred are included in profit or loss.



When the Group acquires a business,
it assesses the financial assets acquired and liabilities assumed for appropriate classification and designation in accordance
with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date. This includes the separation
of embedded derivatives in host contracts by the acquiree.



If the business combination
is achieved in stages, the Group's previously held equity interest in the acquiree is remeasured to fair value at the acquisition
date through profit or loss.



Any contingent consideration
to be transferred by the acquirer is recognized at fair value at the acquisition date. Contingent consideration classified as an
asset or liability is measured at subsequent reporting dates in accordance with IFRS 9/HKFRS 9 (2009) or IAS 39/HKAS 39, with the
corresponding gain or loss being recognized in profit or loss. Contingent consideration that is classified as equity is not remeasured
and subsequent settlement is accounted for within equity.



Goodwill is initially measured
at cost, being the excess of the aggregate of the consideration transferred, the amount recognized for non-controlling interests
and any fair value of the Group's previously held equity interests in the acquiree over the identifiable net assets acquired and
liabilities assumed. If the sum of this consideration and other items is lower than the fair value of the net assets of the business
acquired, the difference is recognized in profit or loss as a gain on bargain purchase.



F-15





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 3. | SUMMARY
                                         OF SIGNIFICANT ACCOUNTING POLICIES (continued)
| | -- | -----------------------------------------------------------------------------------------------



Business combinations
and goodwill (continued)



After initial recognition, goodwill
is measured at cost less any accumulated impairment losses. Goodwill is tested for impairment annually or more frequently if events
or changes in circumstances indicate that the carrying value may be impaired. For the purpose of impairment testing, goodwill acquired
in a business combination is, from the acquisition date, allocated to each of the Group's cash-generating units, or groups of cash-generating
units, that are expected to benefit from the synergies of the combination, irrespective of whether other assets or liabilities
of the Group are assigned to those units or groups of units.



Impairment is determined by
assessing the recoverable amount of the exploration and production ("E&P") segment, using value in use, to which
the goodwill relates. Where the recoverable amount of the cash-generating unit (group of cash-generating units) is less than the
carrying amount, an impairment loss on goodwill is recognized. An impairment loss recognized for goodwill is not reversed in a
subsequent period.



Where goodwill has been allocated
to a cash-generating unit (or group of cash-generating units) and part of the operation within that unit is disposed of, the goodwill
associated with the operation disposed of is included in the carrying amount of the operation when determining the gain or loss
on the disposal. Goodwill disposed of in these circumstances is measured based on the relative value of the operation disposed
of and the portion of the cash-generating unit retained.



Subsidiaries



Subsidiaries are all those
entities over which the Group has power over the investee such that the Group is able to direct the relevant activities, has exposure
or rights to variable returns from its involvement with the investee and has the ability to use its power over the investee to
affect the amount of the investor's returns.



Associates



Based on the Group's ownership
percentage (considering its direct ownership as well as potentially exercisable or convertible shares) and other contractual rights,
the Group has significant influence over its associates, rather than the power to control.



The Group's investments in
associates are stated in the consolidated statement of financial position at the Group's share of net assets under the equity method
of accounting, less any impairment losses. Adjustments are made to bring into line any dissimilar accounting policies that may
exist. Under the equity method, an investment in an associate is initially recognized in the consolidated statement of financial
position at cost and adjusted thereafter to recognize the Group's share of the profit or loss and other comprehensive income of
the associate. Unrealized gains and losses resulting from transactions between the Group and its associates are eliminated to the
extent of the Group's investments in the associates, except where unrealized losses provide evidence of an impairment of the asset
transferred. Goodwill arising from the acquisition of associates is included as part of the Group's investments in associates and
is not individually tested for impairment.



Joint arrangements



Certain of the Group's activities
are conducted through joint arrangements. Joint arrangements are classified as either a joint operation or joint venture, based
on the rights and obligations arising from the contractual obligations between the parties to the arrangement.



Joint control



Joint control is the contractually
agreed sharing of control of an arrangement, which exists only when decisions about the relevant activities require unanimous consent
of the parties sharing control.



F-16





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                                         (continued)
| | -- | -----------------------------------------------------------------------------------------------



Joint arrangements(continued)



Joint operations



Some arrangements have been
assessed by the Group as joint operations as both parties to the contract are responsible for the assets and obligations in proportion
to their respective interest, whether or not the arrangement is structured through a separate vehicle. This evaluation applies
to both the Group's interests in production sharing arrangements and certain joint operation.



The Group entered into numerous
production sharing arrangements or similar agreements in China and overseas countries. The Group's participating interest may vary
in each arrangement. The Group, as one of the title owners under certain exploration and/or production licenses or permits, is
required to bear exploration (with some exceptions in China), development and operating costs together with other co-owners based
on each owner's participating interest. Once production occurs, a certain percentage of the annual production or revenue is first
distributed to the local government, which, in most cases, with the nature of royalty and other taxes or expenses, and the rest
of the annual production or revenue is allocated among the co-owners.



The Group accounts for the
assets, liabilities, revenues and expenses relating to its interest in a joint operation in accordance with the IFRSs/HKFRSs applicable
to the particular assets, liabilities, revenues and expenses.



Joint venture



A joint venture is a joint
arrangement whereby the parties that have joint control of the arrangement have rights to the net assets of the arrangement.



The Group's investments in
joint ventures are stated in the consolidated statement of financial position at the Group's share of net assets under the equity
method of accounting, less any impairment losses. Adjustments are made to bring into line any dissimilar accounting policies that
may exist. Under the equity method, an investment in a joint venture is initially recognized in the consolidated statement of financial
position at cost and adjusted thereafter to recognize the Group's share of the profit or loss and other comprehensive income of
the joint venture. Where the profit sharing ratios are different to the Group's equity interest, the share of post-acquisition
results of the joint ventures is determined based on the agreed profit sharing ratio. Unrealized gains and losses resulting from
transactions between the Group and its joint ventures are eliminated to the extent of the Group's investments in the joint ventures,
except where unrealized losses provide evidence of an impairment of the asset transferred. Goodwill arising from the acquisition
of joint ventures is included as part of the Group's investments in joint ventures and is not individually tested for impairment.



Related parties



A party is considered to be related to
the Group if:



| | (a) | the party is a person or a close member of that person's family and that person
| | --- | -------------------------------------------------------------------------------



| | (i) | has control or joint control of the Group;
| | --- | ------------------------------------------



| | (ii) | has significant influence over the Group; or
| | ---- | --------------------------------------------



| | (iii) | is a member of the key management personnel of the Group or of a parent of the Group;
| | ----- | -------------------------------------------------------------------------------------



F-17





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                                         (continued)
| | -- | -----------------------------------------------------------------------------------------------



Related parties(continued)



| | (b) | the party is an entity where any of the following conditions applies:
| | --- | ---------------------------------------------------------------------



| | (i) | the entity and the Group are members of the same group;
| | --- | -------------------------------------------------------



| | (ii) | one entity is an associate or joint venture of the other entity (or of a parent, subsidiary or
fellow subsidiary of the other entity);
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------



| | (iii) | the entity and the Group are joint ventures of the same third party;
| | ----- | --------------------------------------------------------------------



| | (iv) | one entity is a joint venture of a third entity and the other entity is an associate of the third
entity;
| | ---- | ---------------------------------------------------------------------------------------------------------



| | (v) | the entity is a post-employment benefit plan for the benefit of employees of either the Group or
an entity related to the Group;
| | --- | --------------------------------------------------------------------------------------------------------------------------------



| | (vi) | the entity is controlled or jointly controlled by a person identified in (a); and
| | ---- | ---------------------------------------------------------------------------------



| | (vii) | a person identified in (a)(i) has significant influence over the entity or is a member of the key
management personnel of the entity (or of a parent of the entity).
| | ----- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------



Impairment of
non-financial assets other than goodwill



Where an indication of impairment
exists, or when annual impairment testing for an asset is required (other than inventories, deferred tax assets, financial assets
and goodwill), the asset's recoverable amount is estimated. An asset's recoverable amount is the higher of the asset's or cash-generating
unit's value in use and its fair value less costs of disposal, and is determined for an individual asset, unless the asset does
not generate cash inflows that are largely independent of those from other assets or groups of assets, in which case the recoverable
amount is determined for the cash-generating unit to which the asset belongs.



An impairment loss is recognized
only if the carrying amount of an asset exceeds its recoverable amount. In assessing value in use, the estimated future cash flows
are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value
of money and the risks specific to the asset. An impairment loss is charged to profit or loss in the period in which it arises
in those expense categories consistent with the function of the impaired asset.



An assessment is made at the
end of each reporting period as to whether there is any indication that previously recognized impairment losses may no longer exist
or may have decreased. If such an indication exists, the recoverable amount is estimated. A previously recognized impairment loss
of an asset other than goodwill is reversed only if there has been a change in the estimates used to determine the recoverable
amount of that asset, but not to an amount higher than the carrying amount that would have been determined (net of any depreciation/amortization)
had no impairment loss been recognized for the asset in prior years. A reversal of such an impairment loss is credited to profit
or loss in the period in which it arises.



Property, plant
and equipment



Property, plant and equipment
comprise oil and gas properties, and vehicles and office equipment and others.



| | (a) | Oil and gas properties
| | --- | ----------------------



For oil
and gas properties, the successful efforts method of accounting is adopted. The Group capitalizes the initial acquisition costs
of oil and gas properties. Impairment of initial acquisition costs is recognized based on exploratory experience and management
judgement and charged to profit and loss as exploration expenses. Upon discovery of commercial reserves, acquisition costs are
transferred to proved properties. The costs of drilling and equipping successful exploratory wells, all development expenditures
on construction, installation or completion of infrastructure facilities such as platforms, pipelines, processing plants and the
drilling of development wells and the building of enhanced recovery facilities, including those renewals and betterments that extend
the economic lives of the assets, and the related borrowing costs are capitalized. The costs of unsuccessful exploratory wells
and all other exploration costs are expensed as incurred.



F-18





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)





| | 3. | SUMMARY OF SIGNIFICANT ACCOUNTING
                                         POLICIES (continued)
| | -- | -----------------------------------------------------------------------------------------------



Property, plant
and equipment (continued)



| | (a) | Oil and gas properties (continued)
| | --- | ----------------------------------



The Group
carries exploratory well costs as an asset when the well has found a sufficient quantity of reserves to justify its completion
as a producing well and where the Group is making sufficient progress assessing the reserves and the economic and operating viability
of the project. Exploratory well costs not meeting these criteria are charged to expenses. Exploratory wells that discover potentially
economic reserves in areas where major capital expenditure will be required before production would begin and when the major capital
expenditure depends upon the successful completion of further exploratory work remain capitalized and are reviewed periodically
for impairment.



Producing
oil and gas properties are depreciated on a unit-of-production basis over the proved developed reserves. Common facilities that
are built specifically to service production directly attributed to designated oil and gas properties are depreciated based on
the proved developed reserves of the respective oil and gas properties on a pro-rata basis. Common facilities that are not built
specifically to service identified oil and gas properties are depreciated using the straight-line method over their estimated useful
lives. Costs associated with significant development projects are not depreciated until commercial production commences and the
reserves related to those costs are excluded from the calculation of depreciation.



Capitalized
acquisition costs of proved properties are depreciated on a unit-of-production method over the total proved reserves of the relevant
oil and gas properties.



| | (b) | Vehicles, office equipment and others
| | --- | -------------------------------------



Vehicles, office equipment and
others are stated at cost less accumulated depreciation and impairment losses. The straight-line method is adopted to depreciate
the cost less any estimated residual value of these assets over their expected useful lives. The useful lives of vehicles, office
equipment and other assets are in line with their beneficial periods.



Where parts of an item of property,
plant and equipment have different useful lives, the cost of that item is allocated on a recoverable basis among the parts and
each part is depreciated separately.



Residual values, useful lives
and the depreciation method are reviewed and, adjusted if appropriate, at each reporting date.



Any gains and losses on disposals
of property, plant and equipment (calculated as the difference between the net disposal proceeds and the carrying amount of the
asset) are recognized in profit or loss.



Intangible assets
(other than goodwill)



The intangible assets of the
Group comprise software, gas processing rights of the NWS Project, marketing transportation and storage contracts, drilling rig
contracts and seismic data usage rights. Intangible assets with finite lives are carried at cost, less accumulated amortization
and accumulated impairment losses. The cost of intangible assets acquired in a business combination is the fair value as at the
date of acquisition. Intangible assets with finite lives except for gas processing rights, are amortized on the straight-line basis
over the useful economic life and assessed for impairment whenever there is an indication that the intangible asset may be impaired.
The amortization period and the amortization method for an intangible asset with a finite useful life are reviewed at least at
each financial year end.



F-19





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                                         (continued)
| | -- | -----------------------------------------------------------------------------------------------



Intangible assets
(other than goodwill) (continued)



The intangible assets regarding
software have been amortized on the straight-line basis over their respective useful lives. The intangible asset regarding the
gas processing rights has been amortized upon the commercial production of the liquefied natural gas on a unit-of-production basis
over the total proved reserves of the relevant asset. The intangible assets regarding the marketing transportation and storage
contracts and drilling rig contracts are amortized over the life of the contracts on the straight-line basis. The intangible assets
related to the seismic data usage rights are amortized over the estimated useful life of the seismic data.



Major maintenance
and repairs



Expenditure on major maintenance
refits or repairs comprises the cost of replacement assets or parts of assets and overhaul costs. Where an asset or part of an
asset that was separately depreciated and is replaced, and it is probable that future economic benefits associated with the item
will flow to the Group, the replacement expenditure is capitalized. Where part of the asset was not separately considered as a
component, the replacement value is used to estimate the carrying amount of the replaced assets which is immediately written off.
All other maintenance costs are expensed as incurred.



Research and development
costs



All research costs
are expensed as incurred.



Expenditure (other than that
relating to oil and gas properties discussed above) incurred on projects to develop new products is capitalized and deferred only
when the Group can demonstrate the technical feasibility of completing the intangible asset so that it will be available for use
or sale, its intention to complete and its ability to use or sell the asset, how the asset will generate future economic benefits,
the availability of resources to complete the project and the ability to measure reliably the expenditure during the development.
Product development expenditure which does not meet these criteria is expensed when incurred.



Financial assets



All recognized financial assets
are subsequently measured in their entirety at either amortized cost or fair value, depending on the classification of the financial
assets.



| | (a) | Financial assets at amortized cost
| | --- | ----------------------------------



Debt instruments and hybrid
contracts that meet the following conditions are subsequently measured at amortized cost less impairment loss:



• the asset is held within
a business model whose objective is to hold assets in order to collect contractual cash flows; and



• the contractual terms
of the instrument give rise on specified dates to cash flows that are solely payments of principal and interest on the principal
amount outstanding.



All other financial assets are
subsequently measured at fair value.



F-20





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued)
| | -- | ------------------------------------------------------



Financial assets(continued)



| | (a) | Financial assets at amortized cost (continued)
| | --- | ----------------------------------------------



The effective interest method
is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period.
The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid
or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through
the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.
Interest income for debt instruments measured subsequently at amortized cost is recognized in profit or loss in accordance with
the policies set out for "Revenue Recognition" below.



| | (b) | Financial assets at fair value through profit or loss (FVTPL)
| | --- | -------------------------------------------------------------



Investments in equity instruments
are classified as at FVTPL, unless the Group designates such investment that is not held for trading as at FVTOCI on initial recognition.



A financial asset is held for
trading if it has been acquired principally for the purpose of selling it in the near term or it is a derivative that is not designated
and effective as a hedging instrument.



Debt instruments that do not
meet the amortized cost criteria (see (a) above) are measured at FVTPL. In addition, debt instruments that meet the amortized cost
criteria but are designated as at FVTPL are measured at FVTPL. A debt instrument may be designated as at FVTPL upon initial recognition
if such designation eliminates or significantly reduces a measurement or recognition inconsistency that would arise from measuring
assets or liabilities or recognizing the gains and losses on them on different bases.



Financial assets at FVTPL are
measured at fair value at the end of each reporting period, with any gains or losses arising on remeasurement recognized in profit
or loss.



| | (c) | Financial assets at fair value through other comprehensive income (FVTOCI)
| | --- | --------------------------------------------------------------------------



On initial recognition, the
Group can make an irrevocable election (on an instrument-by-instrument basis) to designate investments in equity instruments as
at FVTOCI. The Group has investments in certain equity instruments (publicly traded or non-publicly traded), the purpose of which
are not held for trading, but held for medium or long-term strategic purpose. Therefore, those investments in equity securities
are designated as at FVTOCI.



Investments in equity instruments
at FVTOCI are initially measured at fair value plus transaction costs. Subsequently, they are measured at fair value with gains
and losses arising from changes in fair value recognized in other comprehensive income and accumulated in the other reserves. The
cumulative gain or loss will not be reclassified to profit or loss on disposal of the investments.



Dividends on these investments
in equity instruments are recognized in profit or loss when the Group’s right to receive the dividends is established in
accordance with IAS 18/HKAS 18 Revenue, unless the dividends clearly represent a recovery of part of the cost of the investment.



F-21





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                                         (continued)
| | -- | -----------------------------------------------------------------------------------------------



Fair value



The fair value of financial
instruments that are traded in active markets at each reporting date is determined by reference to quoted market prices or dealer
price quotations, without any deduction for transaction costs.



For financial instruments not
traded in an active market, the fair value is determined using appropriate valuation techniques. Such techniques may include using
recent arm's length market transactions; reference to the current fair value of another instrument that is substantially the same;
a discounted cash flow analysis or other valuation models.



An analysis of fair values
of financial instruments and further details as to how they are measured are provided in note 32.



Impairment of
financial assets



The Group assesses at each
reporting date whether there is any objective evidence that a financial asset, other than those at FVTPL and FVTOCI, or a group
of financial assets may be impaired.



In relation to trade and other
receivables, a provision for impairment is made when there is objective evidence (such as the probability of insolvency or significant
financial difficulties of the debtor and significant changes in the technological, market, economic or legal environment that have
an adverse effect on the debtor) that the Group will not be able to collect all of the amounts due under the original terms of
an invoice.



If there is objective evidence
that an impairment loss on financial assets measured at amortized cost has been incurred, the amount of the loss is measured as
the difference between the asset's carrying amount and the present value of estimated future cash flows (excluding future credit
losses that have not been incurred) discounted at the financial asset's original effective interest rate (the effective interest
rate computed at initial recognition). The carrying amount of the asset is reduced either directly or through the use of an allowance
account. The amount of the impairment loss is recognized in profit or loss.



If, in a subsequent year, the
amount of the estimated impairment loss decreases and the decrease can be related objectively to an event occurring after the impairment
was recognized, the previously recognized impairment loss is reduced either directly or by adjusting the allowance account. Any
subsequent reversal of an impairment loss is recognized in profit or loss, to the extent that the carrying value of the asset does
not exceed amortized cost at the reversal date.



Derecognition
of financial assets



A financial asset (or, where
applicable a part of a financial asset or part of a group of similar financial assets) is derecognized when:



| | (i) | The contractual rights to receive cash flows from the asset have expired; or
| | --- | ----------------------------------------------------------------------------



| | (ii) | the Group has transferred its rights to receive cash flows from the asset, or the Group retains
the contractual rights to receive the cash flows from the asset, but has assumed an obligation to pay the received cash flows in
full without material delay to a third party under a "pass-through" arrangement; and either (a) has transferred substantially
all the risks and rewards of the asset, or (b) has neither transferred nor retained substantially all the risks and rewards of
the asset, but has no control of the asset.
| | ---- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-22





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                                         (continued)
| | -- | -----------------------------------------------------------------------------------------------



Derecognition
of financial assets (continued)



When the Group has transferred
its rights to receive cash flows from an asset or has entered into a pass-through arrangement, it evaluates if and to what extent
it has retained the risk and rewards of ownership of the asset. When it has neither transferred nor retained substantially all
the risks and rewards of the asset nor transferred control of the asset, the Group continues to recognize the transferred asset
to the extent of the Group's continuing involvement. In that case, the Group also recognizes an associated liability. The transferred
asset and the associated liability are measured on a basis that reflects the rights and obligations that the Group has retained.



Financial liabilities
at amortized cost (including interest-bearing loans and borrowings)



Financial liabilities including
trade and accrued payables, other payables and accrued liabilities, and interest-bearing loans and borrowings are initially stated
at fair value less directly attributable transaction costs and are subsequently measured at amortized cost, using the effective
interest method. The related interest expense is recognized in profit or loss.



Gains and losses are recognized
in profit or loss when the liabilities are derecognized as well as through the amortization process.



Financial guarantee
contracts



A financial guarantee contract
is recognized initially at its fair value including transaction costs that are directly attributable to the issue of the guarantee.
Subsequent to initial recognition, the liability is measured at the higher of the best estimate of the expenditure required to
settle the present obligation at the reporting date and the amount recognized less cumulative amortization.



Derecognition
of financial liabilities



Financial liabilities are derecognized
when the obligations under the liabilities are discharged, cancelled, or have expired.



When an existing financial
liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are
substantially modified, such an exchange or modification is treated as a derecognition of the original liability and a recognition
of a new liability, and the difference between the respective carrying amounts is recognized in profit or loss.



Offsetting of
financial instruments



Financial assets and liabilities
are offset and the net amount reported in the consolidated statement of financial position, if and only if, there is a currently
enforceable legal right to offset the recognized amounts and there is an intention to settle on a net basis, or to realize the
assets and settle the liabilities simultaneously.



Inventories and
supplies



Inventories primarily consist
of oil and supplies, including items for repairs and maintenance of oil and gas properties. Inventories are stated at the lower
of cost and net realizable value. Costs of inventories and supplies represent purchase or production cost of goods and are determined
on a weighted average basis.



Cash and cash
equivalents



Cash and cash equivalents comprise
cash at banks and on hand and short term deposits with an original maturity of three months or less.



F-23





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                                         (continued)
| | -- | -----------------------------------------------------------------------------------------------



Provisions



| | (a) | General
| | --- | -------



A provision is recognized when
a present obligation (legal or constructive) has arisen as a result of a past event and it is probable that a future outflow of
resources will be required to settle the obligation, provided that a reliable estimate can be made of the amount of the obligation.
When the effect of discounting is material, the amount recognized for a provision is the present value at the reporting date of
the future expenditures expected to be required to settle the obligation. The increase in the discounted present value amount arising
from the passage of time is included in profit or loss.



| | (b) | Dismantlement liability
| | --- | -----------------------



Dismantlement liability is recognized
when the Group has a present legal or constructive obligation as a result of the past events, and it is probable that an outflow
of resources will be required to settle the obligation, and a reliable estimate of the amount of the obligation can be made. A
corresponding amount equivalent to the provision is also recognized as part of the cost of the related property, plant and equipment.
The amount recognized is the estimated cost of dismantlement, discounted to its present value using a current pre-tax rate that
reflects, where appropriate, the risks specific to the liability. Changes in the estimated timing of dismantlement or dismantlement
cost estimates are dealt with prospectively by recording an adjustment to the provision, and a corresponding adjustment to property,
plant and equipment. The unwinding of the discount on the dismantlement provision is included as a finance cost.



Income tax



Income tax comprises current
and deferred tax. Income tax is recognized in the consolidated statement of profit or loss and other comprehensive income, either
as an expense as it relates to operating activities or as a component of the applicable categories of other comprehensive income
or expense.



Current tax assets and liabilities
for the current and prior periods are measured at the amount expected to be recovered from or paid to the taxation authorities.
The tax rates and tax laws used to compute the amount are those that are enacted or substantially enacted, by the reporting date,
in the countries where the Group operates and generates taxable income.



Deferred tax is provided, using
the balance sheet liability method, on all temporary differences at the reporting date between the tax bases of assets and liabilities
and their carrying amounts for financial reporting purposes.



Deferred tax liabilities are
recognized for all taxable temporary differences, except:



| | · | when the deferred tax liability arises from the initial recognition of an asset or liability in
a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor
taxable profit or loss; and
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | in respect of taxable temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, when the timing of the reversal of the temporary differences can be controlled and it is probable
that the temporary differences will not reverse in the foreseeable future.
| | - | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-24





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                                         (continued)
| | -- | -----------------------------------------------------------------------------------------------



Income tax (continued)



Deferred tax assets are recognized
for all deductible temporary differences, the carryforward of unused tax credits and any unused tax losses to the extent that
it is probable that taxable profit and taxable temporary differences will be available against which the deductible temporary
differences, the carryforward of unused tax credits and unused tax losses can be utilized, except:



| | · | when the deferred tax assets relating to the deductible temporary differences arise from the initial
recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects
neither the accounting profit nor taxable profit or loss; and
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | · | in respect of deductible temporary differences associated with investments in subsidiaries, associates
and interests in joint ventures, deferred tax assets are only recognized to the extent that it is probable that the temporary differences
will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The carrying amount of deferred
tax assets is reviewed at each reporting date and reduced to the extent that it is no longer probable that sufficient taxable profit
will be available to allow all or part of the deferred tax asset to be utilized. Unrecognized deferred tax assets are reassessed
at each reporting date and are recognized to the extent that it is probable that sufficient taxable profit and taxable temporary
differences will be available to allow all or part of the deferred tax asset to be utilized.



Deferred tax assets and liabilities
are measured at the tax rates that are expected to apply to the period when the asset is realized or the liability is settled,
based on tax rates (and tax laws) that have been enacted or substantively enacted at the reporting date.



Deferred tax assets and deferred
tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities
and the deferred taxes relate to the same taxable entity and the same taxation authority.



Revenue recognition



Revenue is recognized when
it is probable that the economic benefits will flow to the Group and when the revenue can be measured reliably, on the following
bases:



| | (a) | Oil and gas sales
| | --- | -----------------



Oil and gas sales represent
the invoiced value of sales of oil and gas attributable to the interests of the Group, net of royalties, obligations to governments
and other mineral interest owners. Revenue from the sale of oil and gas is recognized when the significant risks and rewards of
ownership have been transferred, which is when title passes to the customer. Revenue from the production of oil and gas in which
the Group has a joint interest with other producers is recognized based on the Group’s working interest and the terms of
the relevant production sharing contracts. Differences between production sold and the Group’s share of production are not
significant.



F-25





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 3. | SUMMARY OF SIGNIFICANT ACCOUNTING
                                         POLICIES (continued)
| | -- | -----------------------------------------------------------------------------------------------



Revenue recognition
(continued)



| | (a) | Oil and gas sales (continued)
| | --- | -----------------------------



Oil and gas lifted and sold
by the Group above or below the Group's participating interests in the production sharing contracts results in overlifts and underlifts.
The Group records these transactions in accordance with the entitlement method under which overlifts are recorded as liabilities
and underlifts are recorded as assets at year-end oil prices. Settlement will be in kind or in cash when the liftings are equalised
or in cash when production ceases.



The Group has entered into gas
sale contracts with customers, which contain take-or-pay clauses. Under these contracts, the Group makes a long term supply commitment
in return for a commitment from the buyer to pay for minimum quantities, whether or not it takes delivery. These commitments contain
protective (force majeure) and adjustment provisions. If a buyer has a right to get a "make up" delivery at a later date,
revenue recognition is deferred. If no such option exists according to the contract terms, revenue is recognized when the take-or-pay
penalty is triggered.



| | (b) | Marketing revenues
| | --- | ------------------



Marketing revenues principally
represent the sales of oil and gas from the foreign partners under the production sharing contracts and revenues from the trading
of oil and gas through the Company’s subsidiaries. The cost of the oil and gas sold is included in “Crude oil and product
purchases” in the consolidated statement of profit or loss and other comprehensive income. In addition, the Group’s
marketing activities in North America involves entering into contracts to purchase and sell crude oil, natural gas and other energy
commodities, and use derivative contracts, including futures, forwards, swaps and options for hedging and trading purposes (collectively
derivative contracts). Any change in the fair value is also included in marketing revenue.



| | (c) | Other income
| | --- | ------------



Other income mainly represents
project management fees charged to foreign partners, handling fees charged to customers, the sales of diluents to third parties
and gains from disposal of oil and gas properties and is recognized when the services have been rendered or the properties have
been disposed of. Reimbursement of insurance claims is recognized when the compensation becomes receivable.



| | (d) | Dividend income
| | --- | ---------------



Dividend income is recognized
when the Group's right to receive payment is established.



| | (e) | Interest income
| | --- | ---------------



Interest income is recognized
as it accrues using the effective interest method.



The Group presents taxes collected
from customers in the consolidated statement of profit or loss and other comprehensive income on a net basis.



F-26





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                                         (continued)
| | -- | -----------------------------------------------------------------------------------------------



Share-based payment
transactions



Employees (including directors)
of the Group receive remuneration in the form of share-based payment transactions, whereby employees render services as consideration
for equity instruments ("equity-settled transactions").



The cost of equity-settled
transactions with employees is measured by reference to the fair value at the date at which they are granted. The fair value is
determined by using the Black-Scholes option pricing model, further details of which are given in note 26.



The cost of equity-settled
transactions is recognized, together with a corresponding increase in equity, over the period in which the performance and/or service
conditions are fulfilled. The cumulative expense recognized for equity-settled transactions at the end of the each reporting period
until the vesting date reflects the extent to which the vesting period has expired and the Group's best estimate of the number
of equity instruments that will ultimately vest. The charge or credit to profit or loss for a period represents the movement in
the cumulative expense recognized as at the beginning and end of that period.



No expense is recognized for
awards that do not ultimately vest for the Group.



No equity-settled award was
cancelled or modified during the years ended December 31, 2015, 2016 and 2017.



The dilutive effect of outstanding
options is reflected as additional share dilution in the computation of earnings per share.



Retirement and
termination benefits



The Group participates in defined
contribution plans in accordance with local laws and regulations for full-time employees in the PRC and other countries in which
it operates. The Group's contributions to these defined contribution plans are charged to profit or loss in the year to which they
relate.



Borrowing costs



Borrowing costs consist of
interest and other costs that an entity incurs in connection with the borrowing of funds. Borrowing costs directly relating to
the acquisition, construction or production of a qualifying asset that necessarily takes a substantial period of time to get ready
for its intended use or sale are capitalized as part of the cost of the respective assets. All other borrowing costs are expensed
in the period in which they are incurred.



Foreign currencies



These consolidated financial
statements are presented in RMB. Each entity in the Group maintains its books and records in its own functional currency. Foreign
currency transactions recorded by the entities of the Group are initially recorded using their respective exchange rates ruling
at the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated at the exchange
rates ruling at the end of the reporting period. All differences arising on settlement or translation of monetary items are taken
to profit or loss. Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using
the exchange rates at the dates of the initial transactions. Non-monetary items measured at fair value in a foreign currency are
translated using the exchange rates at the date when the fair value was determined. The gain or loss arising on retranslation of
a non-monetary item is treated consistently with the recognition of the gain or loss on change in fair value of the item.



F-27





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                                         (continued)
| | -- | -----------------------------------------------------------------------------------------------



Foreign currencies
(continued)



The functional currencies
of certain entities within the Group are currencies other than RMB. As at the end of the reporting period, the assets and liabilities
of these entities are translated into the presentation currency of the Group at the exchange rates ruling at the reporting date,
and their statement of profit or loss and other comprehensive income are translated into RMB at the weighted average exchange
rates for the year. The resulting exchange differences are included in the cumulative translation reserve. On disposal of a foreign
operation, the deferred cumulative amount recognized in equity relating to that particular foreign operation is recognized in
profit or loss.



Operating leases



Leases where substantially
all the rewards and risks of ownership of assets remain with the lessor are accounted for as operating leases. Where the Group
is the lessee, rentals payable under operating leases are charged to profit or loss on the straight-line basis over the lease terms.



Prepaid land lease payments
under operating leases in China are initially stated at cost and subsequently amortized on the straight-line basis over the lease
terms.



Contingencies



A contingent liability is disclosed
when the existence of an obligation will only be confirmed by future events or when the amount of the obligation cannot be measured
reliably.



A contingent asset is not recognized
in the financial statements, but is disclosed when an inflow of economic benefits is probable.



Significant accounting
judgements, estimates and assumptions



The preparation of the consolidated
financial statements in accordance with IFRSs and HKFRSs requires management to make estimates and assumptions that affect the
reported amounts of assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues
and expenses during the reporting period. Estimates and judgements are continuously evaluated and are based on management's experience
and other factors, including expectations of future events that are believed to be reasonable under the circumstances. However,
actual outcomes can differ from these estimates.



In the process of applying
the Group's accounting policies, the Directors have made the following judgements, estimates and assumptions, which have the most
significant effect on the amounts recognized in the consolidated financial statements.



| | (a) | Reserve base
| | --- | ------------



Oil and gas properties are depreciated
on a unit-of-production basis at a rate calculated by reference to proved reserves. Commercial reserves are determined using estimates
of oil in place, recovery factors and future oil prices, the latter having an impact on the proportion of the gross reserves which
are attributable to the host government under the terms of the production sharing contracts. The level of estimated commercial
reserves is also a key determinant in assessing whether the carrying value of any of the Group's oil and gas properties has been
impaired.



Pursuant to the oil and gas
reserve estimation requirements under US Securities and Exchange Commission's rules, the Group uses the average, first-day-of-the-month
oil price during the 12-month period before the ending date of the period covered by the consolidated financial statements to estimate
its proved oil and gas reserves.



F-28





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                                         (continued)
| | -- | -----------------------------------------------------------------------------------------------



Significant accounting
judgements, estimates and assumptions (continued)



| | (b) | Carrying value of oil and gas properties
| | --- | ----------------------------------------



The calculation of the unit-of-production
rate for oil and gas properties amortization could be impacted to the extent that actual production in the future is different
from current forecast production based on proved reserves. This would generally result from significant changes in any of the factors
or assumptions used in estimating reserves. These factors could include changes in proved reserves, the effect on proved reserves
of differences between actual oil and gas prices and oil and gas price assumptions and unforeseen operational issues.



| | (c) | Recoverable amount of oil and gas properties
| | --- | --------------------------------------------



The Company makes an assessment
whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable, or when there
is any indication that an impairment loss previously recognized for an asset in prior years may no longer exist or may have decreased.
In any event, the Company would make an estimate of the asset’s recoverable amount, which is calculated at the higher of
the asset’s value in use and its fair value less costs of disposal. The Company recognizes an impairment loss only if the
carrying amount of an asset exceeds its recoverable amount. The Company charges an impairment loss to the profit or loss in the
period in which it arises. A reversal of an impairment loss is credited to the profit or loss in the period in which it arises.



The calculations of the recoverable
amount of assets require the use of estimates and assumptions. The key assumptions include, but are not limited to, future oil
and gas prices, future production estimates, estimated future capital expenditures, estimated future operating expenses and the
discount rate.



Changes in the key assumptions
used, which could be significant, include updates to future pricing estimates, updates to future production estimates to align
with the Company's anticipated drilling plan, changes in the Company's capital costs and operating expense assumptions, and discount
rate. There is a significant degree of uncertainty with the assumptions used to estimate future cash flows due to various risk
factors. The complex economic outlook may also materially and adversely affect the Company’s key assumptions. Changes in
economic conditions can also affect the discount rates applied in assessments of impairment.



Actual cash flows are likely
to be different from those estimated or forecast since anticipated events frequently do not occur as expected and unforeseen events
may arise. The Company's results of operations could be materially and adversely affected for the period in which future impairment
charges are incurred.



The sensitivity analysis for
the impairment testing involves estimates and judgments to consider numerous assumptions comprehensively. Those assumptions interact
on each other and interrelate with each other complexly and do not have fixed patterns along with the changes in price. Accordingly,
the Company believes that the preparation of the sensitivity analysis for the impairment testing will be impracticable. Changes
in assumptions could affect impairment charges and reversals in the consolidated statement of profit or loss and other comprehensive
income, and the carrying amounts of assets in the consolidated statement of financial position.



F-29





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 3. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
                                         (continued)
| | -- | -----------------------------------------------------------------------------------------------



Significant accounting
judgements, estimates and assumptions (continued)



| | (d) | Dismantlement costs
| | --- | -------------------



Dismantlement costs will be
incurred by the Group at the end of the operating life of certain of the Group's facilities and properties. The ultimate dismantlement
costs are uncertain and cost estimates can vary in response to many factors including changes to relevant legal requirements, the
emergence of new restoration techniques or experience at other production sites. The expected timing and amount of expenditure
can also change, for example, in response to changes in reserves or changes in laws and regulations or their interpretation. As
a result, there could be significant adjustments to the provisions established which would affect future financial results.



| | (e) | Taxes
| | --- | -----



Uncertainties exist with respect
to the interpretation of complex tax regulations (including those applicable to tax credits) and the amount and timing of future
taxable income. Given the wide range of international business relationships and the long term nature and complexity of existing
contractual agreements, differences arising between the actual results and the assumptions made, or future changes to such assumptions,
could necessitate future adjustments to tax income and expense already recorded. The Group establishes provisions, based on best
estimates, for possible consequences of audits by the tax authorities of the respective countries in which it operates. The amount
of such provisions is based on various factors, such as the Group's experience of previous tax audits and differing interpretations
of tax regulations by the taxable entity and the responsible tax authority. Such differences of interpretation may arise on a wide
variety of issues depending on the conditions prevailing in the respective group company's domicile.



F-30





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 4. | OIL AND
                                         GAS SALES
| | -- | ----------------------------------------------------------



|                              |  | 2015 |         | 2016 |  | 2017
|----------------------------- |  | ---- | ------- | ---- |  | ----
|Gross sales                   |  |      | 150,618 |      |  |     
|Less: Royalties               |  |      | (2,646  | )    |  |     
|PRC government’s share of oil |  |      | (1,375  | )    |  |     
|                              |  |      |         |      |  |     
|Oil and gas sales             |  |      | 146,597 |      |  |     



| | 5. | SEGMENT INFORMATION
| | -- | -------------------



| | (a) | Segment results
| | --- | ---------------



The Group is engaged worldwide
in the upstream operating activities of the conventional oil and gas, shale oil and gas, oil sands and other unconventional oil
and gas business. The Group reports the business through three operating and reporting segments: E&P, trading business and
corporate. These segments are operating segments whose financial information are reviewed by the Group’s chief operating
decision marker when making decisions regarding allocating resources and assessing performance. The geographical information is
separately disclosed in (b).



F-31





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 5 | SEGMENT INFORMATION (continued)
| | - | -------------------------------



| | (a) | Segment results (continued)
| | --- | ---------------------------



The following table presents the segment
financial information for the Group for the years ended December 31, 2015, 2016 and 2017.



|                                                                |  | E&P  |          | Trading
    business |  | Corporate |          | Eliminations |  | Consolidated
|--------------------------------------------------------------- |  | ---- | -------- | -------------------- |  | --------- | -------- | ------------ |  | ------------
|                                                                |  | 2015 |          | 2016                 |  | 2017      |          | 2015         |  | 2016        
|External revenue                                                |  |      | 137,243  |                      |  |           | 114,935  |              |  |             
|Intersegment
    revenue*                                       |  |      | 12,339   |                      |  |           | 10,676   |              |  |             
|Total
    revenue                                               |  |      | 149,582  |                      |  |           | 125,611  |              |  |             
|Segment
    profit/(loss) for the year                          |  |      | 15,695   |                      |  |           | (346     | )            |  |             
|Amounts included in
    the measure of segment profit or loss   |  |      |          |                      |  |           |          |              |  |             
|Operating expenses                                              |  |      | (28,372  | )                    |  |           | (23,220  | )            |  |             
|Taxes other than income
    tax                                 |  |      | (10,748  | )                    |  |           | (6,901   | )            |  |             
|Exploration expenses                                            |  |      | (9,973   | )                    |  |           | (7,393   | )            |  |             
|Depreciation, depletion
    and amortization                    |  |      | (72,665  | )                    |  |           | (68,333  | )            |  |             
|Impairment and provision                                        |  |      | (2,690   | )                    |  |           | (12,180  | )            |  |             
|Selling and administrative
    expenses                         |  |      | (3,644   | )                    |  |           | (4,920   | )            |  |             
|Interest income                                                 |  |      | 147      |                      |  |           | 217      |              |  |             
|Finance costs                                                   |  |      | (3,407   | )                    |  |           | (3,384   | )            |  |             
|Share of profits/(losses)
    of associates and a joint venture |  |      | (117     | )                    |  |           | (63      | )            |  |             
|Income tax (expense)/credit                                     |  |      | 44       |                      |  |           | 3,811    |              |  |             
|                                                                |  |      |          |                      |  |           |          |              |  |             
|Other segment information                                       |  |      |          |                      |  |           |          |              |  |             
|Investments in associates
    and a joint venture               |  |      | 800      |                      |  |           | 737      |              |  |             
|Others                                                          |  |      | 532,765  |                      |  |           | 497,413  |              |  |             
|Segment
    assets                                              |  |      | 533,565  |                      |  |           | 498,150  |              |  |             
|Segment
    liabilities                                         |  |      | (364,056 | )                    |  |           | (331,339 | )            |  |             
|Capital
    expenditure                                         |  |      | 66,122   |                      |  |           | 49,122   |              |  |             












* Certain oil and gas produced
by the E&P segment are sold via the trading business segment. For the Group's chief operating decision maker's assessment of
segment performance, these revenues are reclassified back to E&P segment.



F-32





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 5. | SEGMENT INFORMATION (continued)
| | -- | -------------------------------



| | (b) | Geographical information
| | --- | ------------------------



The Group mainly engages in
the exploration, development, production and sale of crude oil, natural gas and other petroleum products in offshore China. Activities
outside the PRC are mainly conducted in Canada, the United States of America, the United Kingdom, Nigeria, Argentina, Indonesia,
Uganda, Iraq, Brazil and Australia etc.



In presenting the Group’s
geographical information, revenues from external customers are based on the location of the Group’s customers, and non-current
assets are attributed to the segments based on the location of the Group’s assets. 65% (2016: 70%, 2015: 73%) of the Group’s
revenues are generated from PRC customers, and revenues generated from customers in other locations are individually less than
10%.



The following table presents
certain non-current assets information for the Group’s geographical information for the years ended December 31, 2015, 2016
and 2017.



|                                               |  | PRC  |         | Canada |  | Others |         | Consolidated
|---------------------------------------------- |  | ---- | ------- | ------ |  | ------ | ------- | ------------
|                                               |  |      |         |        |  |        |         |             
|                                               |  | 2015 |         | 2016   |  | 2017   |         | 2015        
|                                               |  |      |         |        |  |        |         |             
|Property, plant and equipment                  |  |      | 193,359 |        |  |        | 174,853 |             
|Investments in associates  and a joint venture |  |      | 3,499   |        |  |        | 3,451   |             
|Other non-current assets                       |  |      | 7,087   |        |  |        | 6,593   |             



| | (c) | Information about major customers
| | --- | ---------------------------------



The current year's revenue of
approximately RMB15,488 million (2016: approximately RMB9,659 million, 2015: approximately RMB14,692 million ) was derived from
sales by the E&P segment and the trading business segment to China Petroleum & Chemical Corporation. Sales to CNOOC Group
are included in Note 28 (iii).



F-33





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 6. | PROFIT/(LOSS) BEFORE TAX
| | -- | ------------------------



The
Group’s profit/(loss) before tax is arrived at after charging/(crediting):



|                                                                    |  | 2015 |        | 2016 |  | 2017
|------------------------------------------------------------------- |  | ---- | ------ | ---- |  | ----
|                                                                    |  |      |        |      |  |     
|Crediting:                                                          |  |      |        |      |  |     
|Interest income from bank deposits                                  |  |      | (873   | )    |  |     
|                                                                    |  |      |        |      |  |     
|Investment income:                                                  |  |      |        |      |  |     
|– Fair value changes on other financial assets                      |  |      | (2,398 | )    |  |     
|                                                                    |  |      |        |      |  |     
|Insurance compensation on disposal of property, plant and equipment |  |      | (560   | )    |  |     
|                                                                    |  |      |        |      |  |     
|Charging:                                                           |  |      |        |      |  |     
|Auditors’ remuneration:                                             |  |      |        |      |  |     
|– Audit fee                                                         |  |      | 45     |      |  |     
|– Other fees                                                        |  |      | 12     |      |  |     
|                                                                    |  |      |        |      |  |     
|                                                                    |  |      | 57     |      |  |     
|                                                                    |  |      |        |      |  |     
|Employee wages, salaries, allowances and social security costs      |  |      | 6,924  |      |  |     
|                                                                    |  |      |        |      |  |     
|Impairment and provision:                                           |  |      |        |      |  |     
|- Property, plant and equipment                                     |  |      | 2,358  |      |  |     
|- Trade receivables                                                 |  |      | 4      |      |  |     
|- Others                                                            |  |      | 384    |      |  |     
|                                                                    |  |      | 2,746  |      |  |     
|                                                                    |  |      |        |      |  |     
|Depreciation, depletion and amortization:                           |  |      |        |      |  |     
|– Property, plant and equipment                                     |  |      | 72,293 |      |  |     
|– Intangible assets                                                 |  |      | 1,306  |      |  |     
|– Less: Net amount capitalized                                      |  |      | (160   | )    |  |     
|                                                                    |  |      |        |      |  |     
|                                                                    |  |      | 73,439 |      |  |     
|                                                                    |  |      |        |      |  |     
|Operating lease rentals:                                            |  |      |        |      |  |     
|– Office properties                                                 |  |      | 438    |      |  |     
|– Plant and equipment                                               |  |      | 2,448  |      |  |     
|                                                                    |  |      |        |      |  |     
|                                                                    |  |      | 2,886  |      |  |     
|                                                                    |  |      |        |      |  |     
|Repairs and maintenance                                             |  |      | 5,034  |      |  |     
|Research and development costs                                      |  |      | 1,629  |      |  |     
|Loss on disposal of property, plant and equipment                   |  |      | 718    |      |  |     

F-34





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 7. | FINANCE COSTS
| | -- | -------------



|                                                                    |  | 2015 |        | 2016 |  | 2017
|------------------------------------------------------------------- |  | ---- | ------ | ---- |  | ----
|                                                                    |  |      |        |      |  |     
|Interest on bank loans                                              |  |      | 291    |      |  |     
|Interest on other loans                                             |  |      | 4,701  |      |  |     
|Other borrowing costs                                               |  |      | 76     |      |  |     
|                                                                    |  |      |        |      |  |     
|Total borrowing costs                                               |  |      | 5,068  |      |  |     
|                                                                    |  |      |        |      |  |     
|Less: Amount capitalized in property, plant and equipment (note 13) |  |      | (1,385 | )    |  |     
|                                                                    |  |      |        |      |  |     
|                                                                    |  |      | 3,683  |      |  |     
|Other finance costs:                                                |  |      |        |      |  |     
|Unwinding of discount on provision for dismantlement (note 25)      |  |      | 2,435  |      |  |     
|                                                                    |  |      |        |      |  |     
|                                                                    |  |      | 6,118  |      |  |     



The
effective interest rates used to determine the amount of related borrowing costs for capitalization varied from 0.95% to 7.875%
(2016: from 0.7566% to 7.875% , 2015: from 0.735% to 7.875%) per annum during the year ended at December 31, 2017.



| | 8. | KEY MANAGEMENT PERSONNEL’S REMUNERATION
| | -- | ---------------------------------------



Key
management personnel are those persons having authority and responsibility for planning, directing and controlling the activities
of the entity, directly or indirectly, including any director (whether executive or otherwise) of the Company.



| | (i) | Directors’ remuneration
| | --- | -----------------------



|                                     |  | Fees (1) RMB’000 |       | Salaries allowances and benefits in kind (1) RMB’000 |  | Performance related bonuses (1) RMB’000 |     | Pension scheme contributions RMB’000 |  | Total paid/payable during the year RMB’000
|------------------------------------ |  | ---------------- | ----- | ---------------------------------------------------- |  | --------------------------------------- | --- | ------------------------------------ |  | ------------------------------------------
|2015                                 |  |                  |       |                                                      |  |                                         |     |                                      |  |                                           
|Executive directors:                 |  |                  |       |                                                      |  |                                         |     |                                      |  |                                           
|                                     |  |                  |       |                                                      |  |                                         |     |                                      |  |                                           
|Li Fanrong(4)                        |  |                  | -     |                                                      |  |                                         | 170 |                                      |  |                                           
|Wu Guangqi(5)(7)                     |  |                  | -     |                                                      |  |                                         | 170 |                                      |  |                                           
|Subtotal                             |  |                  | -     |                                                      |  |                                         | 340 |                                      |  |                                           
|Non-executive directors:             |  |                  |       |                                                      |  |                                         |     |                                      |  |                                           
|Wang Yilin(2)                        |  |                  | -     |                                                      |  |                                         | -   |                                      |  |                                           
|Yang Hua(2)(4)(10)                   |  |                  | -     |                                                      |  |                                         | -   |                                      |  |                                           
|Lv Bo(7)                             |  |                  | -     |                                                      |  |                                         | -   |                                      |  |                                           
|Wang Jiaxiang(3)                     |  |                  | -     |                                                      |  |                                         | -   |                                      |  |                                           
|Subtotal                             |  |                  | -     |                                                      |  |                                         | -   |                                      |  |                                           
|Independent non-executive directors: |  |                  |       |                                                      |  |                                         |     |                                      |  |                                           
|Chiu Sung Hong                       |  |                  | 899   |                                                      |  |                                         | -   |                                      |  |                                           
|Lawrence J. Lau                      |  |                  | 763   |                                                      |  |                                         | -   |                                      |  |                                           
|Tse Hau Yin, Aloysius                |  |                  | 899   |                                                      |  |                                         | -   |                                      |  |                                           
|Kevin G. Lynch                       |  |                  | 763   |                                                      |  |                                         | -   |                                      |  |                                           
|Subtotal                             |  |                  | 3,324 |                                                      |  |                                         | -   |                                      |  |                                           
|Total                                |  |                  | 3,324 |                                                      |  |                                         | 340 |                                      |  |                                           





F-35





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 8. | KEY MANAGEMENT PERSONNEL’S REMUNERATION (continued)
| | -- | ---------------------------------------------------



| | (i) | Directors’ remuneration (continued)
| | --- | -----------------------------------



|                          |  | Fees (1) RMB’000 |       | Salaries allowances and benefits in kind (1) RMB’000 |  | Performance related bonuses (1) RMB’000 |     | Pension scheme contributions RMB’000 |  | Total paid/payable during the year RMB’000
|------------------------- |  | ---------------- | ----- | ---------------------------------------------------- |  | --------------------------------------- | --- | ------------------------------------ |  | ------------------------------------------
|                          |  |                  |       |                                                      |  |                                         |     |                                      |  |                                           
|2016                      |  |                  |       |                                                      |  |                                         |     |                                      |  |                                           
|Executive directors:      |  |                  |       |                                                      |  |                                         |     |                                      |  |                                           
|                          |  |                  |       |                                                      |  |                                         |     |                                      |  |                                           
|Yang Hua(2)(4)(10)        |  |                  | -     |                                                      |  |                                         | -   |                                      |  |                                           
|Yuan Guagnyu(4)(8)        |  |                  | -     |                                                      |  |                                         | 94  |                                      |  |                                           
|Li Fanrong(4)             |  |                  | -     |                                                      |  |                                         | 92  |                                      |  |                                           
|                          |  |                  |       |                                                      |  |                                         |     |                                      |  |                                           
|Subtotal                  |  |                  | -     |                                                      |  |                                         | 186 |                                      |  |                                           
|                          |  |                  |       |                                                      |  |                                         |     |                                      |  |                                           
|Non-executive directors:  |  |                  |       |                                                      |  |                                         |     |                                      |  |                                           
|                          |  |                  |       |                                                      |  |                                         |     |                                      |  |                                           
|Liu Jian(6)               |  |                  | -     |                                                      |  |                                         | -   |                                      |  |                                           
|Wu Guangqi(5)(7)          |  |                  | -     |                                                      |  |                                         | 92  |                                      |  |                                           
|Lv Bo(7)                  |  |                  | -     |                                                      |  |                                         | -   |                                      |  |                                           
|                          |  |                  |       |                                                      |  |                                         |     |                                      |  |                                           
|Subtotal                  |  |                  | -     |                                                      |  |                                         | 92  |                                      |  |                                           
|                          |  |                  |       |                                                      |  |                                         |     |                                      |  |                                           
|Independent non-executive |  |                  |       |                                                      |  |                                         |     |                                      |  |                                           
|directors:                |  |                  |       |                                                      |  |                                         |     |                                      |  |                                           
|Chiu Sung Hong            |  |                  | 957   |                                                      |  |                                         | -   |                                      |  |                                           
|Lawrence J. Lau           |  |                  | 812   |                                                      |  |                                         | -   |                                      |  |                                           
|Tse Hau Yin, Aloysius     |  |                  | 957   |                                                      |  |                                         | -   |                                      |  |                                           
|Kevin G. Lynch            |  |                  | 812   |                                                      |  |                                         | -   |                                      |  |                                           
|Subtotal                  |  |                  | 3,538 |                                                      |  |                                         | -   |                                      |  |                                           
|Total                     |  |                  | 3,538 |                                                      |  |                                         | 278 |                                      |  |                                           



|2017                      |  |  |       |  |  |  |     |  |  | 
|------------------------- |  |  | ----- |  |  |  | --- |  |  | 
|Executive directors:      |  |  |       |  |  |  |     |  |  | 
|                          |  |  |       |  |  |  |     |  |  | 
|Yuan Guangyu(4)(8)        |  |  | -     |  |  |  | 197 |  |  | 
|Xu Keqiang(9)             |  |  | -     |  |  |  | 146 |  |  | 
|                          |  |  |       |  |  |  |     |  |  | 
|Subtotal                  |  |  | -     |  |  |  | 343 |  |  | 
|                          |  |  |       |  |  |  |     |  |  | 
|Non-executive directors:  |  |  |       |  |  |  |     |  |  | 
|                          |  |  |       |  |  |  |     |  |  | 
|Yang Hua(2)(4)(10)        |  |  | -     |  |  |  | -   |  |  | 
|Liu Jian(6)               |  |  | -     |  |  |  | -   |  |  | 
|Wu Guangqi(5)(7)          |  |  | -     |  |  |  | -   |  |  | 
|                          |  |  |       |  |  |  |     |  |  | 
|Subtotal                  |  |  | -     |  |  |  | -   |  |  | 
|                          |  |  |       |  |  |  |     |  |  | 
|Independent non-executive |  |  |       |  |  |  |     |  |  | 
|directors:                |  |  |       |  |  |  |     |  |  | 
|Chiu Sung Hong            |  |  | 972   |  |  |  | -   |  |  | 
|Lawrence J. Lau           |  |  | 824   |  |  |  | -   |  |  | 
|Tse Hau Yin, Aloysius     |  |  | 972   |  |  |  | -   |  |  | 
|Kevin G. Lynch            |  |  | 824   |  |  |  | -   |  |  | 
|Subtotal                  |  |  | 3,592 |  |  |  | -   |  |  | 
|Total                     |  |  | 3,592 |  |  |  | 343 |  |  | 

F-36





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 8. | KEY MANAGEMENT PERSONNEL’S REMUNERATION (continued)
| | -- | ---------------------------------------------------



| | (i) | Directors’ remuneration (continued)
| | --- | -----------------------------------



| | Notes: | 
| | ------ | 



| | (1) | Fees, salaries, allowances, benefits in kind and performance related bonuses represent the gross
amount (before applicable individual salary tax) paid/payable to individual directors.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | On May 19, 2015, Mr. Yang Hua was appointed as Chairman of the Board and Chairman of the Nomination
Committee of the Company and has no longer served as Vice-chairman of the Board. Mr. Wang Yilin resigned as Chairman of the Board,
Chairman of the Nomination Committee and non-executive director of the Company.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | On September 23, 2015, Mr. Wang Jiaxiang retired as a non-executive director of the Company.
| | --- | --------------------------------------------------------------------------------------------



| | (4) | On 15 June 2016, Mr. Yang Hua was re-designated as an Executive Director and appointed as the Chief
Executive Officer of the Company. Mr. Yuan Guangyu was appointed as an Executive Director and the President of the Company. Mr.
Li Fanrong resigned as an Executive Director, the Chief Executive Officer and the President of the Company.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (5) | On 15 June 2016, Mr. Wu Guangqi was re-designated as a Non-executive Director of the Company and
resigned as the Compliance Officer of the Company.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------



| | (6) | On 20 December 2016, Mr. Liu Jian was appointed as the Vice Chairman and a Non-executive Director
of the Company.
| | --- | -----------------------------------------------------------------------------------------------------------------



| | (7) | On 20 December 2016, Mr. Wu Guangqi was appointed as a member of the Remuneration Committee of
the Company. Mr. Lv Bo resigned as a Non-executive Director and a member of the Remuneration Committee of the Company.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (8) | On 18 April 2017, Mr. Yuan Guangyu was appointed as the Chief Executive Officer of the Company.
Mr. Yuan Guangyu resigned as the President of the Company.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------



| | (9) | On 18 April 2017, Mr. Xu Keqiang was appointed as an Executive Director and the President of the
Company.
| | --- | ---------------------------------------------------------------------------------------------------------



| | (10) | On 18 April 2017, Mr. Yang Hua was re-designated as a Non-executive Director of the Company. Mr.
Yang Hua resigned as the Chief Executive Officer of the Company and he remains as the Chairman of the Board.
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The Company has adopted the
share option schemes for the grant of options to the Company's directors. The fair value of share options for the directors measured
according to the Group's accounting policy as set out in note 3. No Directors exercised any share option in 2015, 2016 or 2017.
No new share option was granted to Directors in respect of their services to the Group under the applicable share option schemes
of the Company in 2015, 2016 or 2017. Further details of share option scheme and valuation techniques are set out in note 26.



Save as disclosed above, there
was no arrangement under which a director waived or agreed to waive any remuneration during the year. In 2017, the executive directors'
remuneration shown above were for their services in connection with the management of the affairs of the Company. The other directors'
remuneration shown above were for their services as directors of the Company.



F-37





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 8. | KEY MANAGEMENT
                                         PERSONNEL’S REMUNERATION (continued)
| | -- | --------------------------------------------------------------------------------------------



( ii)	Other
key management personnel’s (excluding Directors’) remuneration



|                                    |  | 2015 |   | 2016 |  | 2017
|----------------------------------- |  | ---- | - | ---- |  | ----
|                                    |  |      |   |      |  |     
|Short term employee benefits        |  |      | 8 |      |  |     
|Pension scheme contributions        |  |      | 1 |      |  |     
|Amount paid/payable during the year |  |      | 9 |      |  |     
|Share options*                      |  |      | - |      |  |     
|                                    |  |      | 9 |      |  |     



The bands of the remuneration of other key management
personnel (excluding Directors) and the related number of members of other key management personnel (excluding Directors) are as
follows:



|                     |  | Number of employees
|-------------------- |  | -------------------
|                     |  | 2015               
|                     |  |                    
|Nil to RMB 2,000,000 |  |                    
|                     |  |                    
















| | * | This item represents the fair value of share options measured according to the Group's
accounting policy as set out in note 3. No other key management personnel exercised any share option in 2015, 2016 or 2017.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-38





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 9. | FIVE HIGHEST PAID EMPLOYEES
| | -- | ---------------------------



During
the year, none (2016: none; 2015: none) of the Directors, details of whose remuneration are disclosed in note 8 (i) above, received
an amount which falls within the category of the five highest paid employees. Details of the remuneration of the five (2016: five;
2015: five) highest paid employees, for the year are as follows:



|                                                   |  | 2015 |    | 2016 |  | 2017
|-------------------------------------------------- |  | ---- | -- | ---- |  | ----
|                                                   |  |      |    |      |  |     
|Basic salaries, allowances and benefits in kind(1) |  |      | 22 |      |  |     
|Performance-related bonuses                        |  |      | 17 |      |  |     
|Pension scheme contributions                       |  |      | 1  |      |  |     
|Amount paid/payable during the year                |  |      | 40 |      |  |     














| | (1) | Salaries, allowances, and benefits in kind represent the gross amount (before applicable
individual salary tax) paid/payable to individual employees.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------



The
remuneration of the five (2016: five, 2015: five) highest paid employees, falls within the following bands:



|                               |  | 2015 |   | 2016 |  | 2017
|------------------------------ |  | ---- | - | ---- |  | ----
|                               |  |      |   |      |  |     
|RMB5,500,001 to RMB6,000,000   |  |      | - |      |  |     
|RMB6,000,001 to RMB6,500,000   |  |      | - |      |  |     
|RMB7,000,001 to RMB7,500,000   |  |      | 3 |      |  |     
|RMB7,500,001 to RMB8,000,000   |  |      | - |      |  |     
|RMB8,000,001 to RMB8,500,000   |  |      | - |      |  |     
|RMB9,000,001 to RMB9,500,000   |  |      | 2 |      |  |     
|RMB10,000,001 to RMB10,500,000 |  |      | - |      |  |     
|                               |  |      | 5 |      |  |     

F-39





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 10. | TAX
| | --- | ---



| | (i) | Income tax
| | --- | ----------



The Company and its subsidiaries
are subject, on an entity basis, to income taxes on profits arising in or derived from the tax jurisdictions in which the entities
of the Group are domiciled and operate. The Company is subject to profits tax at a rate of 16.5 % (2016: 16.5%, 2015: 16.5%) on
profits arising in or derived from Hong Kong.



The Company is regarded as a
Chinese Resident Enterprise (as defined in the "Enterprise Income Tax Law of the People's Republic of China") by the
State Administration of Taxation of the PRC. As a result, the Company is subject to the PRC corporate income tax at the rate of
25% starting from January 1, 2008. The corporate income tax which is subjected in Hong Kong is qualified as a foreign tax credit
to offset the PRC corporate income tax starting from January 1, 2008.



The Company's subsidiary in
Mainland China, CNOOC China Limited, is a wholly-owned foreign enterprise. It is subject to corporate income tax at the rate of
25% under the prevailing tax rules and regulations. CNOOC Deepwater Development Limited, a wholly-owned subsidiary of CNOOC China
Limited, is subject to corporate income tax at the rate of 15% for the three years ended December 31, 2017, after being assessed
as a high and new technology enterprise. The company is in the process of re-applying to be assessed as a high and new technology
enterprise from 2018 to 2020.



Subsidiaries of the Group domiciled
outside the PRC are subject to income tax at rates ranging from 10% to 50% (2016: 10% to 50%, 2015: 10% to 56%). The U.S. government
enacted comprehensive tax legislation in December 2017 that took effect as of January 1, 2018. A one-time non-cash deferred tax
charge was recorded due to the impact of the reduction of U.S. federal corporate income tax rate from 35% to 21%. The U.K. government
decreased the combined income tax rate on North Sea oil and gas activities from 50% to 40% with effect from January 1, 2016.



As of December 31, 2017, deferred
tax liabilities related to undistributed earnings of the Company's overseas subsidiaries have not been provided since the timing
of the reversal of the taxable temporary differences can be controlled by the Company and it is probable that the temporary differences
would not reverse in the foreseeable future.



F-40





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 10. | TAX (continued)
| | --- | ---------------



| | (i) | Income tax (continued)
| | --- | ----------------------



An analysis of the tax (credit)/expense
in the Group's consolidated statement of profit or loss and other comprehensive income is as follows:



|                                                                                           |  | 2015 |         | 2016 |  | 2017
|------------------------------------------------------------------------------------------ |  | ---- | ------- | ---- |  | ----
|                                                                                           |  |      |         |      |  |     
|Current tax                                                                                |  |      |         |      |  |     
|Provision for PRC enterprise income tax on the estimated taxable profits for the year      |  |      | 9,990   |      |  |     
|Provision for overseas enterprise income tax on the estimated taxable profits for the year |  |      | 3,501   |      |  |     
|Deferred tax                                                                               |  |      |         |      |  |     
|Temporary differences in the current year                                                  |  |      | (12,585 | )    |  |     
|Effect of changes in tax rates                                                             |  |      | (4,022  | )    |  |     
|Income tax (credit)/expense for the year                                                   |  |      | (3,116  | )    |  |     



A
reconciliation of the PRC statutory corporate income tax rate to the effective income tax rate ofthe Group
is as follows:



|                                                        |  | 2015 |       | 2016 |  | 2017
|------------------------------------------------------- |  | ---- | ----- | ---- |  | ----
|                                                        |  | %    |       | %    |  | %   
|                                                        |  |      |       |      |  |     
|PRC statutory enterprise income tax rate                |  |      | 25.0  |      |  |     
|Effect of different tax rates for overseas subsidiaries |  |      | (5.8  | )    |  |     
|Effect of changes in tax rates                          |  |      | (23.5 | )    |  |     
|Tax credit from the government                          |  |      | (11.5 | )    |  |     
|Tax reported in equity-accounted entities               |  |      | (0.4  | )    |  |     
|Tax losses previously not recognized                    |  |      | (1.9  | )    |  |     
|Others                                                  |  |      | (0.1  | )    |  |     
|Group’s effective income tax rate                       |  |      | (18.2 | )    |  |     



The
movements of deferred tax liabilities net of deferred tax assets are as follows:



|                             |  | 2015 |         | 2016 |  | 2017
|---------------------------- |  | ---- | ------- | ---- |  | ----
|                             |  |      |         |      |  |     
|At January 1                 |  |      | 14,312  |      |  |     
|Credit to the profit or loss |  |      | (12,585 | )    |  |     
|Changes in tax rates         |  |      | (4,022  | )    |  |     
|Charge to equity             |  |      | 141     |      |  |     
|Exchange differences         |  |      | 206     |      |  |     
|At December 31               |  |      | (1,948  | )    |  |     



F-41





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 10. | TAX (continued)
| | --- | ---------------



| | (i) | Income tax (continued)
| | --- | ----------------------



Principal
components of deferred tax balances are as follows:



|                                                              |  | 2016 |         | 2017
|------------------------------------------------------------- |  | ---- | ------- | ----
|                                                              |  |      |         |     
|Deferred tax assets                                           |  |      |         |     
|Property, plant and equipment                                 |  |      | 1,681   |     
|Provision for dismantlement                                   |  |      | 9,325   |     
|Losses available for offsetting against future taxable profit |  |      | 21,163  |     
|Fair value of long term borrowings                            |  |      | 1,969   |     
|Others                                                        |  |      | 1,389   |     
|                                                              |  |      | 35,527  |     
|                                                              |  |      |         |     
|Deferred tax liabilities                                      |  |      |         |     
|Property, plant and equipment                                 |  |      | (16,208 | )   
|Fair value changes on other financial assets                  |  |      | (139    | )   
|Others                                                        |  |      | (6      | )   
|                                                              |  |      |         |     
|                                                              |  |      | (16,353 | )   
|                                                              |  |      |         |     
|Net deferred tax assets                                       |  |      | 19,174  |     
|                                                              |  |      |         |     
|Of which – deferred tax assets                                |  |      | 24,844  |     
|deferred tax liabilities                                      |  |      | (5,670  | )   



As
at December 31, 2017, the Group had approximately RMB87,623 million (December 31, 2016: RMB82,288 million) of carry-forward tax
losses, predominantly in North America, that would be available to offset against future taxable profits of the subsidiaries in
which the tax losses arose. Most of the US and Canadian tax losses will expire in 8 to 20 years.



Deferred
tax assets in respect of tax losses are recognized only to the extent of the anticipated future taxable profits or reversal of
existing taxable temporary differences.



As
at December 31, 2017, the Group's recognized deferred tax assets on tax losses amounted to RMB75,018 million (December 31, 2016:
RMB68,061 million). Unrecognized tax losses, where recovery is not currently expected, amounted to RMB12,605 million (December
31, 2016: RMB14,227 million). This includes RMB3,181 million (2016: RMB3,207 million) of unrecognized tax loss arising from Uganda
which has no fixed expiry date. The remainder expires between 5 to 20 years.



As
at December 31, 2017, the Group's unrecognized deferred tax assets related to unused tax credits amounted to RMB4,990 million (2016:
RMB5,761 million). This includes RMB4,587 million (2016: RMB4,807 million) of unrecognized deferred tax assets related to unused
tax credits from Nigeria which has no fixed expiry date. The remainder expires between 2026 and 2036.



The
realisability of the deferred tax assets recognized mainly depends on whether sufficient future profits or taxable temporary differences
will be available in the future. In case where the actual future taxable profits generated are less than expected, or change in
facts and circumstances which result in revision of future taxable profits estimation, the balance of deferred tax assets may be
significantly revised.



F-42





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 10. | TAX (continued)
| | --- | ---------------



(ii)       Other
taxes



The
Company's PRC subsidiaries pay the following other taxes and dues:



| | i. | Production tax at the rate of 5% on production under production
sharing contracts;
| | -- | ----------------------------------------------------------------------------------



| | ii. | VAT at the rates from 13% to 17% on taxable sales under independent
oil and gas fields since May 1 2016 according to "Provisional Regulations on VAT of the PRC" and relevant detailed rules
according to the "Circular on Certain Policies on the Pilot Program of the Collection of VAT in Lieu of Business Tax"
(Cai Shui [2016] No.39), which replaced the production tax at the rate of 5% on production under independent oil and gas fields
before May 1 2016. According to “Notice on Simplifying the Relevant Policies on Value-added Tax Rates” (Cai Shui [2017]
No.37), with effect from 1 July 2017, the 13% VAT rate shall be removed and gas sales shall be subject to the 11% tax rate.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



VAT
at the rates from 3% to 17% on other income since May 1 2016, which were subject to the business tax at rates of 3% to 5% or VAT
at the rates of 3% to 17% before May 1 2016.



The
VAT payable is calculated using the taxable sales amount multiplied by the applicable tax rate less relevant deductible input VAT;



| | iii. | Resource tax (reduced tax rates may apply to specific products
and fields) on the oil and gas sales revenue (excluding production tax) derived by oil and gas fields under production sharing
contracts signed after November 1, 2011 and independent offshore oil and gas fields starting from November 1, 2011, which replaced
the royalties for oil and gas fields, except for those under production sharing contracts signed before November 1, 2011 which
will be subject to related resource tax requirement after the expiration of such production sharing contracts. The resource tax
rate was changed from 5% to 6% since December 1, 2014;
| | ---- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | iv. | Export tariff at the rate of 5% on the export value of petroleum
oil;
| | --- | ---------------------------------------------------------------------



| | v. | City construction tax at the rates of 1% or 7% on the production
tax, business tax and VAT paid;
| | -- | ------------------------------------------------------------------------------------------------



| | vi. | Educational surcharge at the rate of 3% on the production
tax, business tax and VAT paid; and
| | --- | ---------------------------------------------------------------------------------------------



| | vii. | Local educational surcharge at the rate of 2% on the production
tax, business tax and VAT paid.
| | ---- | -----------------------------------------------------------------------------------------------



In
addition, other taxes paid and payable by the Company's non-PRC subsidiaries include royalty as well as taxes levied on petroleum-related
income, budgeted operating and capital expenditure.



F-43





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 10. | TAX (continued)
| | --- | ---------------



(iii)       Special
Oil Gain Levy



In
2006, a Special Oil Gain Levy ("SOG Levy") was imposed by the Ministry of Finance of the PRC ("MOF") at the
progressive rates from 20% to 40% on the portion of the monthly weighted average sales price of the crude oil lifted in the PRC
exceeding US$40 per barrel. The MOF has decided to increase the threshold of the SOG Levy to US$65 with effect from January 1,
2015. Notwithstanding this adjustment, the SOG Levy continues to have five levels and is calculated and charged according to the
progressive and valorem rates on the excess amounts. The SOG Levy paid can be claimed as a deductible expense for corporate income
tax purposes and is calculated based on the actual volume of the crude oil entitled.



| | 11. | EARNINGS PER SHARE
| | --- | ------------------



|                                                                                         |  | 2015 |                | 2016 |  | 2017
|---------------------------------------------------------------------------------------- |  | ---- | -------------- | ---- |  | ----
|                                                                                         |  |      |                |      |  |     
|Earnings                                                                                 |  |      |                |      |  |     
|Profit for the purpose of basic and diluted earnings per share calculation               |  |      | 20,246         |      |  |     
|                                                                                         |  |      |                |      |  |     
|Number of shares                                                                         |  |      |                |      |  |     
|Number of ordinary shares for the purpose of basic earnings per share calculation        |  |      | 44,647,455,984 |      |  |     
|                                                                                         |  |      |                |      |  |     
|Effect of dilutive potential ordinary shares under the share option schemes              |  |      | 37,363,069     |      |  |     
|                                                                                         |  |      |                |      |  |     
|Weighted average number of ordinary shares for the purpose of diluted earnings per share |  |      | 44,684,819,053 |      |  |     
|                                                                                         |  |      |                |      |  |     
|Earnings per share:                                                                      |  |      |                |      |  |     
|Basic (RMB Yuan)                                                                         |  |      | 0.45           |      |  |     
|Diluted (RMB Yuan)                                                                       |  |      | 0.45           |      |  |     



F-44





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 12. | DIVIDENDS
| | --- | ---------



|                                                                                                                                                                                                                                   |  | 2015 |        | 2016 |  | 2017
|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------ | ---- |  | ----
|                                                                                                                                                                                                                                   |  |      |        |      |  |     
|Dividend per ordinary share:                                                                                                                                                                                                       |  |      |        |      |  |     
|2017 interim dividend - HK$0.20 (2016: interim dividend HK$0.12, 2015: interim dividend    HK$0.25) per ordinary share                                                                                                             |  |      | 9,145  |      |  |     
|2016 final dividend - HK$0.23 (2015: final dividend HK$0.25, 2014: final dividend    HK$0.32) per ordinary share                                                                                                                   |  |      | 11,274 |      |  |     
|2017 final dividend proposed at HK$0.3 (2016: final dividend proposed at HK$0.23, 2015: final dividend proposed at HK$0.25) per ordinary share by the Board of Directors - not recognized as a liability as at the end of the year |  |      | 9,397  |      |  |     



Pursuant
to the Enterprise Income Tax Law of the People's Republic of China and related laws and regulations, the Company is regarded as
a Chinese Resident Enterprise, and thus is required to withhold corporate income tax at the rate of 10% when it distributes dividends
to its non-resident enterprise (as defined in the "Enterprise Income Tax Law of the People's Republic of China") shareholders,
with effect from the distribution of the 2008 final dividend. In respect of all shareholders whose names appear on the Company's
register of members and who are not individuals (including HKSCC Nominees Limited, corporate nominees or trustees such as securities
companies and banks, and other entities or organizations, which are all considered as non-resident enterprise shareholders), the
Company will distribute the dividend after deducting corporate income tax of 10%.



F-45





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 13. | PROPERTY, PLANT AND EQUIPMENT
| | --- | -----------------------------



|                                                                     |  | Oil and gas properties |          | Vehicles and office equipment and others |  | Total
|-------------------------------------------------------------------- |  | ---------------------- | -------- | ---------------------------------------- |  | -----
|                                                                     |  |                        |          |                                          |  |      
|Cost:                                                                |  |                        |          |                                          |  |      
|                                                                     |  |                        |          |                                          |  |      
|At January 1, 2016                                                   |  |                        | 803,986  |                                          |  |      
|Additions                                                            |  |                        | 44,302   |                                          |  |      
|Disposals and write-offs                                             |  |                        | (6,365   | )                                        |  |      
|Exchange differences                                                 |  |                        | 25,703   |                                          |  |      
|                                                                     |  |                        |          |                                          |  |      
|At December 31, 2016                                                 |  |                        | 867,626  |                                          |  |      
|                                                                     |  |                        |          |                                          |  |      
|At January 1, 2017                                                   |  |                        | 867,626  |                                          |  |      
|Additions                                                            |  |                        | 48,937   |                                          |  |      
|Disposals and write-offs                                             |  |                        | (2,577   | )                                        |  |      
|Exchange differences                                                 |  |                        | (24,985  | )                                        |  |      
|                                                                     |  |                        |          |                                          |  |      
|At December 31, 2017                                                 |  |                        | 889,001  |                                          |  |      
|                                                                     |  |                        |          |                                          |  |      
|Accumulated depreciation, depletion and amortization and impairment: |  |                        |          |                                          |  |      
|                                                                     |  |                        |          |                                          |  |      
|At January 1, 2016                                                   |  |                        | (353,824 | )                                        |  |      
|Depreciation charge for the year                                     |  |                        | (67,906  | )                                        |  |      
|Impairment                                                           |  |                        | (10,768  | )                                        |  |      
|Disposals and write-offs                                             |  |                        | 3,532    |                                          |  |      
|Exchange differences                                                 |  |                        | (10,157  | )                                        |  |      
|                                                                     |  |                        |          |                                          |  |      
|At December 31, 2016                                                 |  |                        | (439,123 | )                                        |  |      
|                                                                     |  |                        |          |                                          |  |      
|At January 1, 2017                                                   |  |                        | (439,123 | )                                        |  |      
|Depreciation charge for the year                                     |  |                        | (60,442  | )                                        |  |      
|Impairment                                                           |  |                        | (8,639   | )                                        |  |      
|Disposals and write-offs                                             |  |                        | 1,185    |                                          |  |      
|Exchange differences                                                 |  |                        | 10,932   |                                          |  |      
|                                                                     |  |                        |          |                                          |  |      
|At December 31, 2017                                                 |  |                        | (496,087 | )                                        |  |      
|                                                                     |  |                        |          |                                          |  |      
|Net book value:                                                      |  |                        |          |                                          |  |      
|At December 31, 2016                                                 |  |                        | 428,503  |                                          |  |      
|                                                                     |  |                        |          |                                          |  |      
|At December 31, 2017                                                 |  |                        | 392,914  |                                          |  |      



Included
in the current year's additions was an amount of approximately RMB2,495 million (2016: approximately RMB1,430 million, 2015: approximately
RMB1,385 million) in respect of interest capitalized in property, plant and equipment (note 7). Included also in the depreciation
charge for the year was an amount of approximately RMB636 million (2016: approximately RMB1,609 million, 2015: approximately RMB3,465
million) in respect of a depreciation charge on dismantlement cost capitalized in oil and gas properties.



F-46





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 13. | PROPERTY, PLANT AND EQUIPMENT (continued)
| | --- | -----------------------------------------



Impairment
and provision recognized during the year included the impairment loss to reduce the carrying amount of certain oil and gas properties
to the recoverable amount. In 2017, the impairment loss was mainly related to fields in China, Africa and North America which was
primarily due to the revision of the oil and gas price forecast and revision of reserves. In 2016, the impairment loss was mainly
related to fields in North America, Europe and Africa primarily due to the revision of the oil price forecast and an adjustment
in operating plan for oil sand assets in Canada.



For
both years, the recoverable amount was calculated based on the assets' value in use and was determined at the cash-generating unit
level. The Company identifies a field or the group of fields that could generate cash inflows independently as a cash-generating
unit. The principal parameters used in determining the recoverable amount of the Group’s assets include estimates of proved
and unproved reserves, future commodity prices that come from the price forecast of respected and independent institutions, combined
with internal analysis and judgment of the international market environment, as well as best estimates of drilling and development
costs.



The
discount rate is derived from the Company’s weighted average cost of capital (“WACC”) and is adjusted, where
applicable, to take into account any specific risks relating to the country where the asset is located as well as the asset specific
characteristics, such as specific tax treatments, cash flow profiles and economic life. The discount rate used for value in use
calculations is 8%-12% in 2017 after tax (2016: 8%-11% after tax). A derived pre-tax discount rate would be in the range of 8%-15%
(2016: 9%-11% pre-tax).



For
2016, included in impairment was RMB7,358 million recognized on the Long Lake project, due to the revision of the oil price forecast
and adjustments to operating plans caused by the pipeline rupture and the explosion accident. Specifically, the operating plan
was changed to defer the timing of when to bring the Long Lake upgrader back online, to make the timing concurrent with the most
recent expectation of when sufficient feedstock will be produced from Long Lake assets to maximize the utilization and cash generating
potential of the upgrader. The Company also updated the yield assumptions based on the most recent operating performance of the
upgrader. The asset was written down to an estimated recoverable amount of RMB33,902 million in June 2016. As at 31 December 2017,
the future operating plan of Long Lake assets is still under assessment by management, which may significantly impact the recoverable
amount of the oil sands properties of Long Lake assets in the future.



During
2017, the Group wrote off certain oil and gas assets in the North America mainly due to the expiration of lease contracts. Approximately
RMB71 million was included in the exploration expenses, and approximately RMB1,588 million was included in the depreciation, depletion
and amortisation charge, respectively.



F-47





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 14. | INTANGIBLE ASSETS
| | --- | -----------------



|                                 |  | Gas processing rights under NWS Project |       | Drilling rig contracts and seismic data usage rights |  | Marketing transportation and storage contracts |        | Software and others |  | Goodwill |        | Total
|-------------------------------- |  | --------------------------------------- | ----- | ---------------------------------------------------- |  | ---------------------------------------------- | ------ | ------------------- |  | -------- | ------ | -----
|                                 |  |                                         |       |                                                      |  |                                                |        |                     |  |          |        |      
|Cost:                            |  |                                         |       |                                                      |  |                                                |        |                     |  |          |        |      
|At January 1, 2016               |  |                                         | 1,191 |                                                      |  |                                                | 1,596  |                     |  |          | 1,527  |      
|Additions                        |  |                                         | -     |                                                      |  |                                                | -      |                     |  |          | -      |      
|Disposal                         |  |                                         | -     |                                                      |  |                                                | -      |                     |  |          | -      |      
|Exchange differences             |  |                                         | 82    |                                                      |  |                                                | 109    |                     |  |          | 104    |      
|                                 |  |                                         |       |                                                      |  |                                                |        |                     |  |          |        |      
|At December 31, 2016             |  |                                         | 1,273 |                                                      |  |                                                | 1,705  |                     |  |          | 1,631  |      
|                                 |  |                                         |       |                                                      |  |                                                |        |                     |  |          |        |      
|At January 1, 2017               |  |                                         | 1,273 |                                                      |  |                                                | 1,705  |                     |  |          | 1,631  |      
|Additions                        |  |                                         | -     |                                                      |  |                                                | -      |                     |  |          | -      |      
|Disposal                         |  |                                         | -     |                                                      |  |                                                | (1,662 | )                   |  |          | (54    | )    
|Exchange differences             |  |                                         | (74   | )                                                    |  |                                                | (43    | )                   |  |          | (93    | )    
|                                 |  |                                         |       |                                                      |  |                                                |        |                     |  |          |        |      
|At December 31, 2017             |  |                                         | 1,199 |                                                      |  |                                                | -      |                     |  |          | 1,484  |      
|                                 |  |                                         |       |                                                      |  |                                                |        |                     |  |          |        |      
|Accumulated amortization:        |  |                                         |       |                                                      |  |                                                |        |                     |  |          |        |      
|At January 1, 2016               |  |                                         | (621  | )                                                    |  |                                                | (958   | )                   |  |          | (1,096 | )    
|Amortization charge for the year |  |                                         | (51   | )                                                    |  |                                                | (326   | )                   |  |          | (135   | )    
|Disposal                         |  |                                         | -     |                                                      |  |                                                | -      |                     |  |          | -      |      
|Exchange differences             |  |                                         | (57   | )                                                    |  |                                                | (80    | )                   |  |          | (81    | )    
|                                 |  |                                         |       |                                                      |  |                                                |        |                     |  |          |        |      
|At December 31, 2016             |  |                                         | (729  | )                                                    |  |                                                | (1,364 | )                   |  |          | (1,312 | )    
|                                 |  |                                         |       |                                                      |  |                                                |        |                     |  |          |        |      
|At January 1, 2017               |  |                                         | (729  | )                                                    |  |                                                | (1,364 | )                   |  |          | (1,312 | )    
|Amortization charge for the year |  |                                         | (46   | )                                                    |  |                                                | (332   | )                   |  |          | (57    | )    
|Disposal                         |  |                                         | -     |                                                      |  |                                                | 1,662  |                     |  |          | 54     |      
|Exchange differences             |  |                                         | 43    |                                                      |  |                                                | 34     |                     |  |          | 76     |      
|                                 |  |                                         |       |                                                      |  |                                                |        |                     |  |          |        |      
|At December 31, 2017             |  |                                         | (732  | )                                                    |  |                                                | -      |                     |  |          | (1,239 | )    
|                                 |  |                                         |       |                                                      |  |                                                |        |                     |  |          |        |      
|Net book value:                  |  |                                         |       |                                                      |  |                                                |        |                     |  |          |        |      
|At December 31, 2016             |  |                                         | 544   |                                                      |  |                                                | 341    |                     |  |          | 319    |      
|                                 |  |                                         |       |                                                      |  |                                                |        |                     |  |          |        |      
|At December 31, 2017             |  |                                         | 467   |                                                      |  |                                                | -      |                     |  |          | 245    |      



Goodwill
represents the excess of the purchase price over the estimated fair value of the assets acquired and liabilities assumed in a business
combination.



According
to the accounting policies as set out in note 3, goodwill is acquired in the acquisition of Nexen Inc., and from the acquisition
date, allocated to the entire E&P assets, which are the groups of cash-generating units that are expected to benefit from the
synergies of the acquisition.



Impairment
is determined by assessing the recoverable amount of the entire E&P assets to which the goodwill relates. Where the recoverable
amount of the entire E&P assets is less than the carrying amount of the assets and the goodwill together, an impairment loss
on goodwill is recognized.



In
assessing value in use of E&P segment, the key assumptions include, but are not limited to, future commodity prices, future
production estimates, estimated future capital expenditures, estimated future operating expenses and the discount rate. The discount
rate used for value in use is derived from the Company’s WACC and is adjusted, where applicable, to take into account any
specific risks relating to the country where the asset is located as well as the asset specific characteristics, such as specific
tax treatments, cash flow profiles and economic life. However, actual results could differ from those estimates.



The
intangible asset regarding the gas processing rights has been amortized upon the commercial production of the liquefied natural
gas on a unit-of -production basis over the total proved reserves of the relevant asset. The intangible assets regarding the marketing
transportation and storage contracts are amortized on a straight-line basis over the life of the contracts which is less than 20
years. Other identifiable intangible assets are amortized on a straight-line basis over a period ranging from 3 to 5 years.



F-48





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 15. | INVESTMENTS IN ASSOCIATES
| | --- | -------------------------



Particulars
of the principal associates at the end of the reporting period are as follows:



|Name of associates                      |  | Place of establishment |  | Nominal value of ordinary shares issued and paid-up/registered capital |  | Percentage of equity attributable to the Group |      | Principal activities
|--------------------------------------- |  | ---------------------- |  | ---------------------------------------------------------------------- |  | ---------------------------------------------- | ---- | --------------------
|Shanghai Petroleum  Corporation Limited |  | Shanghai, PRC          |  | RMB900 million                                                         |  |                                                | 30   | %                   
|                                        |  |                        |  |                                                                        |  |                                                |      |                     
|CNOOC Finance   Corporation Limited     |  | Beijing, PRC           |  | RMB4 billion                                                           |  |                                                | 31.8 | %                   



To
give details of other associate would, in the opinion of the Directors, result in particulars of excessive length.



The
Group’s investments in associates represent:



|                    |  | 2016 |       | 2017
|------------------- |  | ---- | ----- | ----
|Share of net assets |  |      | 3,695 |     



None
of the Group’s associates are considered to be individually material. The following table illustrates the summarized financial
information of the Group’s associates in the consolidated financial statements:



|                                     |  | 2015 |     | 2016 |  | 2017
|------------------------------------ |  | ---- | --- | ---- |  | ----
|                                     |  |      |     |      |  |     
|Profit/(loss) for the year           |  |      | 256 |      |  |     
|Other comprehensive income/(expense) |  |      | 74  |      |  |     
|Total comprehensive income/(expense) |  |      | 330 |      |  |     



Dividend
of RMB116 million was received from the associates in 2017 (2016: RMB135 million).



16.       INVESTMENT
IN A JOINT VENTURE



Particulars
of the joint venture at the end of the reporting period are as follows:



|Name of entity     |  | Place of establishment |  | Nominal value of ordinary shares issued and paid-up/registered capital |  | Percentage of equity attributable to the Group |    | Principal activities
|------------------ |  | ---------------------- |  | ---------------------------------------------------------------------- |  | ---------------------------------------------- | -- | --------------------
|Bridas Corporation |  | British Virgin Islands |  | US$                              	102,325,582                          |  |                                                | 50 | %                   



F-49





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



16.       INVESTMENT
IN A JOINT VENTURE (continued)



Summarized
financial information of the joint venture is disclosed below:



|                                         |  |  |        | 2016 |  | 2017
|---------------------------------------- |  |  | ------ | ---- |  | ----
|Current assets                           |  |  |        |      |  |     
|Non-current assets                       |  |  |        |      |  |     
|Current liabilities                      |  |  |        |      |  |     
|Non-current liabilities                  |  |  |        |      |  |     
|                                         |  |  |        |      |  |     
|                                         |  |  | 2015   |      |  |     
|Revenue                                  |  |  | 31,231 |      |  |     
|Depreciation, depletion and amortization |  |  | (3,535 | )    |  |     
|Interest income                          |  |  | 288    |      |  |     
|Finance costs                            |  |  | (799   | )    |  |     
|Profit before tax                        |  |  | 4,194  |      |  |     
|Income tax expense                       |  |  | (900   | )    |  |     
|Profit after tax                         |  |  | 3,294  |      |  |     
|Total comprehensive income               |  |  | 3,294  |      |  |     



Dividend
of US$36 million (equivalent to RMB243 million) was received from the joint venture in 2017, no dividend was received from the
joint venture in 2016 and dividend of US$5 million (equivalent to RMB32 million) was received from the joint venture in 2015.



F-50





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 17. | EQUITY INVESTMENTS AND OTHER FINANCIAL ASSETS
| | --- | ---------------------------------------------



(i)       Equity
investments



|                                                                             |  | 2016 |       | 2017
|---------------------------------------------------------------------------- |  | ---- | ----- | ----
|Current:                                                                     |  |      |       |     
|Non-publicly traded investments                                              |  |      |       |     
|Private equity funds classified at FVTOCI                                    |  |      | 15    |     
|                                                                             |  |      |       |     
|                                                                             |  |      | 15    |     
|Non-current:                                                                 |  |      |       |     
|Publicly traded investments                                                  |  |      |       |     
|Equity investment in MEG Energy Corporation  (“MEG”) classified at FVTOCI(1) |  |      | 1,356 |     
|Other equity investment classified at FVTPL                                  |  |      | 35    |     
|                                                                             |  |      | 1,391 |     
|Non-publicly traded investments                                              |  |      |       |     
|Private equity fund in Kerogen Energy Fund  classified at FVTOCI (2)         |  |      | 2,875 |     
|                                                                             |  |      |       |     
|                                                                             |  |      | 4,266 |     














| | (1) | MEG is principally engaged in the exploitation and production of oil sands. The investment in MEG is designated by the Group
as at FVTOCI. As at December 31, 2017, the investment in MEG was stated at the quoted market price.
| | --- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Kerogen Energy Fund is principally engaged in the investment in the oil and gas industry. The equity investment in Kerogen
Energy Fund is designated by the Group as at FVTOCI. The cost of this non-publicly traded equity investment represents an appropriate
estimate of its fair value as at January 1, 2017 and December 31, 2017, as sufficient information is not available recently
to measure its fair value.
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-51





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 17. | EQUITY INVESTMENTS AND OTHER FINANCIAL ASSETS (Continued)
| | --- | ---------------------------------------------------------



(ii)       Other
financial assets



|                                                     |  | 2016 |        | 2017
|---------------------------------------------------- |  | ---- | ------ | ----
|Current:                                             |  |      |        |     
|Non-publicly traded investments classified at FVTPL: |  |      |        |     
|Corporate wealth management products (1)             |  |      | 46,958 |     
|Money market funds (2)                               |  |      | 5,931  |     
|                                                     |  |      |        |     
|                                                     |  |      | 52,889 |     












| | (1)` | The corporate wealth management products will mature from January 8, 2018 to November 6, 2018 (2016: January 10, 2017 to December
5, 2017).
| | ---- | -------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | The money market funds can be redeemed at any time.
| | --- | ---------------------------------------------------



The
gains of the Group's other financial assets recognized in the profit or loss for the year was RMB2,409million (2016:
RMB2,774 million, 2015: RMB2,398 million).



During the year, the fair value
changes on the Group's equity investments recognized directly in other comprehensive
expense amounted to RMB542 million (2016: RMB461 million, 2015: RMB1,573 million).



None
of the equity investments and other financial assets above is past due or impaired.



F-52





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



18.       OTHER
NON-CURRENT ASSETS



Included
in the other non-current assets were restricted deposits for future dismantlement. Pursuant to the Provisional Regulations on the
Dismantlement of Offshore Oil and Gas Production Facilities of the People's Republic of China, the Group accrues dismantlement
costs for all the oil and gas fields under production sharing contracts in the PRC, and makes monthly cash contributions to the
specified dismantlement fund accounts supervised by the PRC government. The deposit cannot be withdrawn or utilized for any other
purposes but the dismantlement of oil and gas production facilities in the future. As of December 31, 2017, the balance of the
specified dismantlement fund accounts was RMB7,555 million (December 31, 2016: RMB6,088 million).



| | 19. | INVENTORIES AND SUPPLIES
| | --- | ------------------------



|                                           |  | 2016 |       | 2017
|------------------------------------------ |  | ---- | ----- | ----
|                                           |  |      |       |     
|Materials and supplies                     |  |      | 7,288 |     
|Oil in tanks                               |  |      | 1,594 |     
|Less: Provision for inventory obsolescence |  |      | (173  | )   
|                                           |  |      | 8,709 |     





| | 20. | TRADE
                                         RECEIVABLES
| | --- | ----------------------------------------------------------



The credit terms of the
Group are generally within 30 days after the delivery of oil and gas. Payment in advance or collateral may be required from customers,
depending on credit rating. Trade receivables are non-interest-bearing.



All
customers have good credit quality with good repayment history and no significant receivables are past due. As at December 31,
2017 and December 31, 2016, the age of substantially all the trade receivables was within one year.



| | 21. | CASH AND CASH EQUIVALENTS AND TIME DEPOSITS WITH MATURITY
OVER THREE MONTHS
| | --- | ---------------------------------------------------------------------------



The
Group's cash and cash equivalents mainly consist of current deposits and time deposits with maturity within seven days. The bank
balances are deposited with creditworthy banks with no recent history of default.



The
weighted average effective interest rates of the Group's bank deposits were 2.23% per annum for the year ended December 31, 2017
(2016: 2.95% per annum, 2015: 2.61% per annum).



| | 22. | TRADE AND ACCRUED PAYABLES
| | --- | --------------------------



As
at December 31, 2017 and 2016, substantially all the trade and accrued payables were aged within six months. The trade and accrued
payables are non-interest-bearing.



F-53





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 23. | OTHER PAYABLES AND ACCRUED LIABILITIES
| | --- | --------------------------------------



|                                      |  | 2016 |        | 2017
|------------------------------------- |  | ---- | ------ | ----
|                                      |  |      |        |     
|Accrued payroll and welfare payable   |  |      | 1,509  |     
|Provision for retirement benefits     |  |      | 683    |     
|Accrued expenses                      |  |      | 449    |     
|Advances from customers               |  |      | 3,272  |     
|Special oil gain levy payable         |  |      | -      |     
|Royalties payable                     |  |      | 240    |     
|Provision for dismantlement (note 25) |  |      | 462    |     
|Other payables                        |  |      | 8,251  |     
|                                      |  |      | 14,866 |     



| | 24. | LOANS AND BORROWINGS
| | --- | --------------------



Current



|                                         |  |                                                                  |  | 2016  |        | 2017 
|---------------------------------------- |  | ---------------------------------------------------------------- |  | ----- | ------ | -----
|                                         |  | Effective interest
    rate and final maturity                   |  | Loans |        | Notes
|                                         |  |                                                                  |  |       |        |      
|Short-term loans and borrowings          |  |                                                                  |  |       |        |      
|General loans****                        |  | LIBOR+0.35% to 0.75% per annum
    with maturity within one year |  |       | 10,361 |      
|                                         |  |                                                                  |  |       | 10,361 |      
|Loans and borrowings due within one year |  |                                                                  |  |       |        |      
|For Tangguh LNG Project**                |  | LIBOR+0.19% to 0.335% per annum with maturity within one year    |  |       | 215    |      
|Notes*                                   |  |                                                                  |  |       | -      |      
|                                         |  |                                                                  |  |       | 215    |      
|                                         |  |                                                                  |  |       | 10,576 |      

F-54





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



24.       LOANS
AND BORROWINGS (continued)



Non-current



|                                |  |                                                                   |  | 2016  |       | 2017 
|------------------------------- |  | ----------------------------------------------------------------- |  | ----- | ----- | -----
|                                |  | Effective interest
    rate and final maturity                    |  | Loans |       | Notes
|For Tangguh LNG Project**       |  | LIBOR+0.19% to 0.335% per annum with maturity through
    to 2021 |  |       | 758   |      
|For Tangguh LNG III Project *** |  | LIBOR+1.37% to 3.45% per annum with maturity through 2021 to 2029 |  |       | 327   |      
|Notes*                          |  |                                                                   |  |       | -     |      
|                                |  |                                                                   |  |       | 1,085 |      

F-55





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



24.       LOANS
AND BORROWINGS (continued)



| | * | The details of notes are as follows:
| | - | ------------------------------------





|                                       |  |                 |  |             |       | Outstanding Principal Amount
|-------------------------------------- |  | --------------- |  | ----------- | ----- | ----------------------------
|Issued by                              |  | Maturity        |  | Coupon Rate |       | December 31, 2017           
|                                       |  |                 |  |             |       | USD million                 
|                                       |  |                 |  |             |       |                             
|CNOOC Finance (2003) Limited           |  | Due in 2033     |  |             | 5.500 | %                           
|CNOOC Finance (2011) Limited           |  | Due in 2021     |  |             | 4.25  | %                           
|CNOOC Finance (2011) Limited           |  | Due in 2041     |  |             | 5.75  | %                           
|CNOOC Finance (2012) Limited           |  | Due in 2022     |  |             | 3.875 | %                           
|CNOOC Finance (2012) Limited           |  | Due in 2042     |  |             | 5.000 | %                           
|CNOOC Finance (2013) Limited           |  | Due in 2018     |  |             | 1.750 | %                           
|CNOOC Finance (2013) Limited           |  | Due in 2023     |  |             | 3.000 | %                           
|CNOOC Finance (2013) Limited           |  | Due in 2043     |  |             | 4.250 | %                           
|CNOOC Nexen Finance (2014) ULC         |  | Matured in 2017 |  |             | 1.625 | %                           
|CNOOC Nexen Finance (2014) ULC         |  | Due in 2024     |  |             | 4.25  | %                           
|CNOOC Nexen Finance (2014) ULC         |  | Due in 2044     |  |             | 4.875 | %                           
|Nexen                                  |  | Matured in 2017 |  |             | 5.65  | %                           
|Nexen                                  |  | Due in 2019     |  |             | 6.2   | %                           
|Nexen                                  |  | Due in 2028     |  |             | 7.4   | %                           
|Nexen                                  |  | Due in 2032     |  |             | 7.875 | %                           
|Nexen                                  |  | Due in 2035     |  |             | 5.875 | %                           
|Nexen                                  |  | Due in 2037     |  |             | 6.4   | %                           
|Nexen                                  |  | Due in 2039     |  |             | 7.5   | %                           
|CNOOC Finance (2015) U.S.A. LLC        |  | Due in 2025     |  |             | 3.500 | %                           
|CNOOC Finance (2015) Australia Pty Ltd |  | Due in 2020     |  |             | 2.625 | %                           
|CNOOC Finance (2015) Australia Pty Ltd |  | Due in 2045     |  |             | 4.200 | %                           





All
the notes issued mentioned above were fully and unconditionally guaranteed by the Company.



F-56





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)

24.       LOANS
AND BORROWINGS (continued)



| | ** | In connection with the Tangguh LNG Project in Indonesia,
the Company delivered a guarantee dated October 29, 2007, in favor of Mizuho Corporate Bank, Ltd., which acts as the facility agent
for and on behalf of various international commercial banks under a US$884 million commercial loan agreement. The Company guarantees
the payment obligations of the trustee borrower under the subject loan agreement and is subject to a maximum cap of approximately
US$135,163,308.28.
| | -- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



A
letter of credit agreement was signed between the Company and Talisman Energy Inc. (“Talisman”) with execution of the
agreement in respect of the sale of a 3.05691% interest of the Company in the Tangguh LNG Project to Talisman. Accordingly, Talisman
has delivered valid and unexpired standby letters of credit to the Company (as the beneficiary) as a counter-guarantee to offset
the exposure of the Company’s guarantee for the aforesaid interest of 3.05691% in respect of the Tangguh LNG Project financing.
The amount of the standby letters of credit was US$30 million. In February 2017, the standby letters of credit were withdrawn as
the Company transferred the 3.05691% guarantee obligations to BP Corporation North America Inc..



| | *** | In connection with the financing for the third LNG process
train of Tangguh LNG Project in Indonesia, the Company delivered two guarantees dated August 3, 2016, in favor of Mizuho Bank,
Ltd., which acts as the facility agent for and on behalf of various international commercial banks and Indonesian local commercial
banks under two commercial loan agreements with aggregate loan amount of US$2,145 million. The Company guarantees the payment obligations
of the trustee borrower under the subject loan agreements and is subject to an aggregate maximum cap of approximately US$573 million.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | **** | As at December 31, 2017, US$650 million bank loans (2016:
US$800 million) were guaranteed by the Company.
| | ---- | ---------------------------------------------------------------------------------------------------------



As
at December 31, 2017,US$694 million shareholder loans (2016: US$694 million) of the Group were included in general loans.
For details please refer to Note 28(v).



F-57





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)

24.       LOANS
AND BORROWINGS (continued)



The
maturities of the long term bank loans are as follows:



|                                                           |  | 2016 |       | 2017
|---------------------------------------------------------- |  | ---- | ----- | ----
|Repayable:                                                 |  |      |       |     
|Within one year                                            |  |      | 215   |     
|After one year but within two years                        |  |      | 225   |     
|After two years but within three years                     |  |      | 225   |     
|After three years but within four years                    |  |      | 225   |     
|After four years but within five years                     |  |      | 97    |     
|After five years                                           |  |      | 313   |     
|                                                           |  |      | 1,300 |     
|Amount due within one year shown under current liabilities |  |      | (215  | )   
|                                                           |  |      | 1,085 |     



Supplemental
information with respect to the long term bank loans:



|For the year ended December 31 |  | Balance at year end |       | Weighted average interest rate at year end |  | Maximum amount outstanding during the year |      | Average amount outstanding during the year (1) |  | Weighted average interest rate during the year (2)
|------------------------------ |  | ------------------- | ----- | ------------------------------------------ |  | ------------------------------------------ | ---- | ---------------------------------------------- |  | --------------------------------------------------
|2016                           |  |                     | 1,300 |                                            |  |                                            | 1.74 | %                                              |  |                                                   
|2017                           |  |                     | 1,491 |                                            |  |                                            | 2.52 | %                                              |  |                                                   












| | (1) | The average amount outstanding is computed by averaging the outstanding principal balances
as at January 1, and December 31, of each year.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | The weighted average interest rate is computed by averaging the interest rates as at
January 1, and December 31, of each year.
| | --- | ------------------------------------------------------------------------------------------------------------------------------



There
was no default of principal, interest or redemption terms of the loans and borrowings during the year.



F-58





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 25. | PROVISION FOR
DISMANTLEMENT
| | --- | ---------------------------



|                                                                                              |  | 2016 |        | 2017
|--------------------------------------------------------------------------------------------- |  | ---- | ------ | ----
|At January 1                                                                                  |  |      | 50,063 |     
|New projects(1)                                                                               |  |      | 1,395  |     
|Revision(1)                                                                                   |  |      | (2,072 | )   
|Utilization                                                                                   |  |      | (398   | )   
|Deletions                                                                                     |  |      | (33    | )   
|Unwinding of discount(2) (note 7)                                                             |  |      | 2,185  |     
|Exchange differences                                                                          |  |      | (252   | )   
|At December 31                                                                                |  |      | 50,888 |     
|Current portion of dismantlement included in other payables and accrued liabilities (note 23) |  |      | (462   | )   
|At December 31                                                                                |  |      | 50,426 |     












| | (1) | The amounts are included in the additions of oil and gas properties in note 13.
| | --- | -------------------------------------------------------------------------------



| | (2) | The discount rates used for calculating the provision for dismantlement are within the
range of 4% to 5%(2016: 4% to 5%, 2015: 4% to 5%).
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------



| | 26. | SHARE CAPITAL
| | --- | -------------



|                                                                                                              |  | Number of shares |                | Issued share capital equivalent ofRMB million
|------------------------------------------------------------------------------------------------------------- |  | ---------------- | -------------- | ---------------------------------------------
|                                                                                                              |  |                  |                |                                              
|Issued and fully paid:                                                                                        |  |                  |                |                                              
|Ordinary shares with no par value as at January 1, 2016, as at  December 31, 2016 and as at December 31, 2017 |  |                  | 44,647,455,984 |                                              

F-59





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 26. | SHARE CAPITAL
(continued)
| | --- | -------------------------



Share
option schemes



The
Company has adopted the share option schemes for the grant of options to the Company's directors, senior management and other eligible
grantees.



| | (1) | Pre-Global Offering Share Option Scheme (expired in 2011);
| | --- | ----------------------------------------------------------



| | (2) | 2001 Share Option Scheme (expired in 2011);
| | --- | -------------------------------------------



| | (3) | 2002 Share Option Scheme (expired in 2015); and
| | --- | -----------------------------------------------



| | (4) | 2005 Share Option Scheme (as defined below).
| | --- | --------------------------------------------



Under
these share option schemes, the Remuneration Committee of the Board will from time to time propose for the Board's approval the
grant of share options and the number of share options to be granted to the relevant grantees. The maximum aggregate number of
shares (including those that could be subscribed for under the Pre-Global Offering Share Option Scheme, the 2001 Share Option Scheme,
the 2002 Share Option Scheme and the 2005 Share Option Scheme) which may be issued upon exercise of all options granted shall not
exceed 10% of the total issued share capital of the Company as at December 31, 2005, being the date on which the shareholders of
the Company approved the 2005 Share Option Scheme, excluding shares under options which have lapsed.



2005
Share Option Scheme



On
December 31, 2005, the Company adopted a new share option scheme (the "2005 Share Option Scheme"). Under the 2005 Share
Option Scheme, the Board has the authority to grant options to subscribe for shares to the directors, officers and employees of
the Company and its subsidiaries, and any other persons who in the sole discretion of the Board, have contributed or will contribute
to the Group. Unless approved by the shareholders, the total number of shares issued and to be issued upon exercise of the options
granted to each individual (including exercised and unexercised options) under the 2005 Share Option Scheme or any other share
option scheme adopted by the Company, in any 12-month period, must not exceed 1% of the shares in issue of the Company.



F-60





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 26. | SHARE CAPITAL (continued)
| | --- | -------------------------



Share
option schemes (continued)



2005
Share Option Scheme (continued)



According
to the 2005 Share Option Scheme, the consideration payable by a grantee for the grant of options will be HK$1.00. The exercise
price for such options will be determined by the Board at its discretion at the date of grant, except that such price shall be
at least the higher of:



| | (1) | the nominal value of a share of the Company on the date of
grant;
| | --- | -----------------------------------------------------------------



| | (2) | the average closing price of the shares as stated in the
HKSE's daily quotation sheets for the five trading days immediately preceding the date of grant; and
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | the closing price of the shares as stated in the HKSE's daily
quotation sheet on the date of grant.
| | --- | ---------------------------------------------------------------------------------------------------



The
period within which the options must be exercised, as well as any minimum holding period or performance targets which apply to
the options, will be specified by the Board of the Company at the time of grant. The exercise periods for options granted under
the 2005 Share Option Scheme shall end not later than 10 years from the date of grant. No options may be granted under the 2005
Share Option Scheme after the date of the 10th anniversary of the adoption of the 2005 Share Option Scheme.



No
new share option was granted during the year (2016 and 2015: nil) and the Group recognized an equity-settled share option expense
of nil (2016 and 2015: nil) during the year.



The
fair value of equity-settled share options granted was estimated as at the date of grant if any, using the Black-Scholes option
pricing model, taking into account the terms and conditions upon which the options were granted.



Details
of the share options outstanding are as follows:



|                                         |  | 2016                    |             | 2017                          
|---------------------------------------- |  | ----------------------- | ----------- | ------------------------------
|                                         |  | Number of share options |             | Weighted averageexercise price
|                                         |  |                         |             | HK$                           
|Outstanding at the beginning of the year |  |                         | 262,592,000 |                               
|Granted during the year                  |  |                         | -           |                               
|Forfeited during the year                |  |                         | (37,893,000 | )                             
|Expired during the year                  |  |                         | (37,170,000 | )                             
|Exercised during the year                |  |                         | -           |                               
|                                         |  |                         |             |                               
|Outstanding at the end of the year       |  |                         | 187,529,000 |                               
|                                         |  |                         |             |                               
|Exercisable at the end of the year       |  |                         | 187,529,000 |                               



No
share options had been cancelled or modified during the years ended December 31, 2015, 2016 or 2017.



F-61





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 26. | SHARE CAPITAL (continued)
| | --- | -------------------------



At
the date of approval of these consolidated financial statements for issuance, the share options outstanding under these share option
schemes represented approximately 0.29% of the Company's shares in issue as at that date (2016: 0.42%, 2015: 0.59%). The weighted
average remaining contractual life of share options outstanding at the end of the year was 1.52 years (2016: 2.11 years, 2015:
2.74 years). The exercise in full of the outstanding share options would, under the present capital structure of the Company, result
in the issue of129,919,000 (2016: 187,529,000 ) additional ordinary shares of the
Company and additional share capital ofRMB1,339,702,913 (2016: RMB1,912,814,087 ).



| | 27. | RESERVES
| | --- | --------



According
to the laws and regulations of the PRC and the articles of association of CNOOC China Limited, CNOOC China Limited is required
to provide for certain statutory funds, namely, the general reserve fund and the staff and workers' bonus and welfare fund, which
are appropriated from net profit (after making up for losses from previous years), but before dividend distribution.



The
general reserve fund, which is determined at the discretion of the board of directors of CNOOC China Limited, can only be used,
upon approval by the relevant authority, to offset against accumulated losses or to increase capital.



Appropriation
to the staff and workers' bonus and welfare fund, which is determined at the discretion of the board of directors of CNOOC China
Limited, is expensed as incurred under IFRSs/HKFRSs. The staff and workers' bonus and welfare fund can only be used for special
bonuses or collective welfare of employees.



As
at December 31, 2017, the general reserve fund amounted to RMB60,000 million (December 31, 2016: RMB10,000 million).



In
accordance with the "Temporary Regulation for Safety Expense Financial Management of Higher Risk Industry" and the implementation
guidance issued by the MOF of the PRC, the Group is required to accrue a safety fund for its oil and gas exploration and production
activities within the PRC by appropriating a portion of its net profit to other reserves based on its annual production from offshore
China. Such reserve is reduced for expenses incurred to improve the safety conditions of oil and gas production. When the safety
fund is fully utilized, additional expenses incurred for safety production purposes are charged directly to the profit or loss
for the year. As of December 31, 2017, the Group's safety fund reserve under the PRC regulations amounted to nil (December 31,
2016: nil).



F-62





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 28. | RELATED PARTY TRANSACTIONS
| | --- | --------------------------



As
disclosed in note 1, the Company is a subsidiary of CNOOC, which is a state-owned enterprise subject to the control of the State
Council of the PRC. The State Council of the PRC directly and indirectly controls a significant number of state-owned entities
and organizations.



Comprehensive framework agreement
with CNOOC in respect of a range of products and services



As
the Group is controlled by CNOOC, transactions with CNOOC, its subsidiaries and associates (the "CNOOC Group") are disclosed
as related party transactions. The connected transactions or continuing connected transactions defined in Chapter 14A of the Listing
Rules in respect of items listed below also constitute related party transactions. The Company has complied with the disclosure
requirements in accordance with Chapter 14A of the Listing Rules for continuing connected transactions listed below. The Company
entered into a comprehensive framework agreement with CNOOC on November 15, 2016 for the provision (1) by the Group to the CNOOC
Group and (2) by the CNOOC Group to the Group, of a range of products and services which may be required and requested from time
to time by either party and/or its associates in respect of the continuing connected transactions. The term of the comprehensive
framework agreement is for a period of three years from January 1, 2017. The continuing connected transactions under the comprehensive
framework agreement and the relevant annual caps for the three years from January 1, 2017 were approved by the independent shareholders
of the Company on December 1, 2016. The approved continuing connected transactions are as follows:



| | (1) | Provision of exploration, oil and gas development, oil and gas production as well as marketing,
management and ancillary services by the CNOOC Group to the Group:
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (a) | Provision of exploration and support services
| | --- | ---------------------------------------------



| | (b) | Provision of oil and gas development and support services
| | --- | ---------------------------------------------------------



| | (c) | Provision of oil and gas production and support services
| | --- | --------------------------------------------------------



| | (d) | Provision of marketing, management and ancillary services
| | --- | ---------------------------------------------------------



| | (e) | Floating production, storage and offloading ("FPSO") vessel leases
| | --- | ------------------------------------------------------------------



| | (2) | Provision of management, technical, facilities and ancillary services, including the supply of
materials by the Group to the CNOOC Group; and
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------



| | (3) | Sales of petroleum and natural gas products by the Group to the CNOOC Group:
| | --- | ----------------------------------------------------------------------------



| | (a) | Sales of petroleum and natural gas products (other than long-term sales of natural gas and liquefied
natural gas)
| | --- | -----------------------------------------------------------------------------------------------------------------



| | (b) | Long-term sales of natural gas and liquefied natural gas
| | --- | --------------------------------------------------------



F-63





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 28. | RELATED PARTY TRANSACTIONS (continued)
| | --- | --------------------------------------



Pricing
principles



The
basic pricing principle for the continuing connected transactions between the Group and the CNOOC Group is based on arm’s
length negotiations, on normal commercial terms or better and with reference to the prevailing local
market conditions (including the volume of sales, length of contracts, the volume of services, overall customer relationship
and other market factors).



On
the basis of the above basic pricing principle, each type of products or services must be charged in accordance with the following
pricing mechanism and in the following sequential order:



| | (a) | government-prescribed prices; or
| | --- | --------------------------------



| | (b) | where there is no government-prescribed
price, in accordance with market prices, includingthe local, national or international
market prices.
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------



The
continuing connected transactions referred to in paragraph (1)(a)-(1)(b) above provided by the CNOOC Group to the Group and (3)(a)-(3)(b)
above provided by the Group to the CNOOC Group, on the basis of the above pricing principle, are based on market prices (as defined
in the comprehensive framework agreement).



The
continuing connected transactions referred to in paragraph (1)(c)-(1)(d) above provided by the CNOOC Group to the Group, on the
basis of the above pricing principle, are based on government-prescribed price or market prices.



The
continuing connected transactions referred to in paragraph (1)(e), on the basis of the above pricing principle, are unanimously
determined with the CNOOC Group which provides the FPSO vessel leases after arm’s length negotiation in accordance with normal
commercial terms.



The
continuing connected transactions referred to in paragraph (2) above provided by the Group to the CNOOC Group, on the basis of
the above pricing principle, are determined through arm’s length negotiation between both parties with reference market price.



F-64





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 28. | RELATED PARTY TRANSACTIONS (continued)
| | --- | --------------------------------------



The
following is a summary of significant related party transactions entered into in the ordinary course of business between the Group
and its related parties during the year and the balances arising from related party transactions at the end of the year:



| | (i) | Provision of exploration, oil and gas development, oil
and gas production as well as marketing, management and ancillary services by the CNOOC Group to the Group
| | --- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------



|                                                                       |  | 2015 |        | 2016 |  | 2017
|---------------------------------------------------------------------- |  | ---- | ------ | ---- |  | ----
|                                                                       |  |      |        |      |  |     
|Provision of exploration and support services                          |  |      | 7,457  |      |  |     
|- Inclusive of amounts capitalized under property, plant and equipment |  |      | 4,158  |      |  |     
|Provision of oil and gas development and support services              |  |      | 22,733 |      |  |     
|Provision of oil and gas production and support services (note a)      |  |      | 8,384  |      |  |     
|Provision of marketing, management and ancillary services (note b)     |  |      | 954    |      |  |     
|FPSO vessel leases (note c)                                            |  |      | 1,770  |      |  |     
|                                                                       |  |      | 41,298 |      |  |     



| | (ii) | Provision of management, technical, facilities and ancillary
services, including the supply of materials by the Group to the CNOOC Group
| | ---- | ----------------------------------------------------------------------------------------------------------------------------------------



The
Group did not enter into any transactions in the above category for the years ended December 31, 2015, 2016 or 2017.



| | (iii) | Sales of petroleum and natural gas products by the Group
to the CNOOC Group
| | ----- | ---------------------------------------------------------------------------



|                                                                                                                           |  | 2015 |         | 2016 |  | 2017
|-------------------------------------------------------------------------------------------------------------------------- |  | ---- | ------- | ---- |  | ----
|                                                                                                                           |  |      |         |      |  |     
|Sales of petroleum and natural gas products (other than long-term sales of natural gas and liquefied natural gas) (note d) |  |      | 105,401 |      |  |     
|Long term sales of natural gas and liquefied natural gas (note e)                                                          |  |      | 10,557  |      |  |     
|                                                                                                                           |  |      | 115,958 |      |  |     



F-65





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 28. | RELATED PARTY TRANSACTIONS (continued)
| | --- | --------------------------------------



| | (iv) | Transactions and balances with CNOOC Finance Corporation
Limited (“CNOOC Finance”) (note f)
| | ---- | -------------------------------------------------------------------------------------------



| | (a) | Interest income received by the Group
| | --- | -------------------------------------



|                                               |  | 2015 |     | 2016 |  | 2017
|---------------------------------------------- |  | ---- | --- | ---- |  | ----
|                                               |  |      |     |      |  |     
|Interest income from deposits in CNOOC Finance |  |      | 629 |      |  |     







| | (b) | Deposits balances made by the Group
| | --- | -----------------------------------



|                          |  | 2016 |        | 2017
|------------------------- |  | ---- | ------ | ----
|                          |  |      |        |     
|Deposits in CNOOC Finance |  |      | 19,437 |     



| | (v) | Balances with the CNOOC Group
| | --- | -----------------------------



|                                                     |  | 2016 |        | 2017
|---------------------------------------------------- |  | ---- | ------ | ----
|                                                     |  |      |        |     
|Amount due to CNOOC                                  |  |      |        |     
|- included in other payables and accrued liabilities |  |      | 215    |     
|Amount due to other related parties                  |  |      |        |     
|- included in trade and accrued payables             |  |      | 15,091 |     
|                                                     |  |      | 15,306 |     
|                                                     |  |      |        |     
|Borrowings from CNOOC (note g)                       |  |      | 4,811  |     
|Amounts due from other related parties               |  |      |        |     
|– included in trade receivables                      |  |      | 13,090 |     
|– included in other current assets                   |  |      | 173    |     
|                                                     |  |      | 13,263 |     



| | (vi) | Balance with a joint venture
| | ---- | ----------------------------



|                                   |  | 2016 |     | 2017
|---------------------------------- |  | ---- | --- | ----
|                                   |  |      |     |     
|Amount due from a joint venture    |  |      |     |     
|– included in other current assets |  |      | 135 |     

F-66





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 28. | RELATED PARTY TRANSACTIONS (continued)
| | --- | --------------------------------------



| | (vii) | Transactions and balances with other state-owned enterprises
| | ----- | ------------------------------------------------------------



The
Group enters into extensive transactions covering sales of crude oil and natural gas, purchase of property, plant and equipment
and other assets, receiving of services, and making deposits with state-owned enterprises, other than the CNOOC Group, in the normal
course of business on terms comparable to those with other non-state-owned enterprises. The purchases of property, plant and equipment
and other assets, and receipt of services from these state-owned enterprises are individually not significant. The individually
significant sales transactions with these state-owned enterprises are disclosed in note 33. In addition, the Group had certain
of its cash in bank and time deposits with certain state-owned banks in the PRC as at December 31, 2017, as summarized below:



|                                                |  | 2016 |        | 2017
|----------------------------------------------- |  | ---- | ------ | ----
|                                                |  |      |        |     
|Cash and cash equivalents                       |  |      | 6,612  |     
|Time deposits with maturity over three months   |  |      | 108    |     
|Specified dismantlement fund accounts (note 18) |  |      | 6,088  |     
|                                                |  |      | 12,808 |     



Interest
rates for the above time deposits and specified dismantlement fund accounts are at prevailing market rates.



| | (viii) | Key management personnel’s remuneration
| | ------ | ---------------------------------------



Key
management personnel’s remuneration is disclosed in note 8.



| | (ix) | Coalbed Methane Resources Exploration and Development Cooperation Agreement with China
United Coalbed Methane Corporation Limited
| | ---- | ---------------------------------------------------------------------------------------------------------------------------------



|                       |  | 2016 |       | 2017
|---------------------- |  | ---- | ----- | ----
|                       |  |      |       |     
|Accumulated investment |  |      | 1,647 |     



The
amount due to the parent company and amounts due from/to related parties are unsecured, interest-free and are repayable on demand,
unless otherwise disclosed.



F-67





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 28. | RELATED PARTY TRANSACTIONS (continued)
| | --- | --------------------------------------



Notes:



| | a) | These represent the services for production operations, the
provision of various facilities and ancillary services, such as provision of different types of materials, medical and employee
welfare services, maintenance and repair of major equipment and supply of water, electricity and heat to the Group, some of which
may not be available from independent third parties or available on comparable terms.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | b) | These include marketing, administration and management, management
of oil and gas operations and integrated research services as well as other ancillary services relating to exploration, development,
production and research activities of the Group. In addition, the CNOOC Group leased certain premises to the Group for use as office
premises and staff quarters out of which they provided management services to certain properties.
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | c) | CNOOC Energy Technology & Services Limited leased FPSO
vessels to the Group for use in oil production operations.
| | -- | -----------------------------------------------------------------------------------------------------------------



| | d) | The sales include crude oil, condensate oil, liquefied petroleum
gas, natural gas and liquefied natural gas to the CNOOC Group. Individual sales contracts were entered into from time to time between
the Group and the CNOOC Group.
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | e) | It is the market practice for sales terms to be determined
based on the estimated reserves and production profile of the relevant gas fields. The long term sales contracts usually last for
5 to 20 years.
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | f) | CNOOC Finance is a 31.8% owned associate of the Company and
also a subsidiary of CNOOC. Under the financial services framework agreement with CNOOC Finance dated December 1, 2016, CNOOC Finance
continues to provide to the Group settlement, depository, discounting, loans and entrustment loans services. The agreement is effective
from January 1, 2017 to December 31, 2019. The depository services were exempted from independent shareholders’ approval
requirements under the Listing Rules. The Group's maximum daily outstanding balance for deposits stated in CNOOC Finance (including
accrued interest but excluding funds placed for the purpose of extending entrustment loans pursuant to the entrustment loan services)
in 2017 was RMB19,500 million (2016: RMB22,000 million).
| | -- | -----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | g) | In September 2014, CNOOC provided CNOOC International Limited,
a wholly-owned subsidiary of the Company a five-year uncommitted revolving loan facility for general purposes, with the principal
amount of US$135 million of 0.95% per annum. As at December 31, 2017, the withdrawal amount of the loan was US$130 million (December
31, 2016: US$130 million); In December 2014, CNOOC provided the Company a five-year uncommitted revolving loan facility for general
purposes, with the principal amount of US$600 million of 0.95% per annum. As at December 31, 2017, the withdrawal amount of the
loan was US$564 million (December 31, 2016: US$564 million).
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



F-68





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 29. | RETIREMENT BENEFITS
| | --- | -------------------



All
the Group's full-time employees in the PRC are covered by a state-managed retirement benefit plan operated by the government of
the PRC, and are entitled to an annual pension. The PRC government is responsible for the pension liabilities to these retired
employees. The Group is required to make annual contributions to the state-managed retirement benefit plan at rates ranging from
11% to 22% of the employees' base salaries.



The
Company is required to make contributions to a defined contribution mandatory provident fund at a rate of 5% of the salaries of
all full-time employees in Hong Kong. The related pension costs are expensed as incurred.



The
Group provides retirement benefits for all local employees in overseas locations in accordance with relevant labor law, and provides
employee benefits to expatriate staff in accordance with the relevant employment contracts.



During
the year, the Group's pension costs charged to the consolidated statement of profit or loss and other comprehensive income amounted
to RMB651 million (2016: RMB695 million, 2015: RMB613 million).



| | 30. | NOTE TO THE CONSOLIDATED STATEMENT OF CASH FLOWS
| | --- | ------------------------------------------------



Reconciliation
of profit/(loss) before tax to cash generated from operations



|                                                                     |  | 2015 |        | 2016 |  | 2017
|-------------------------------------------------------------------- |  | ---- | ------ | ---- |  | ----
|                                                                     |  |      |        |      |  |     
|Profit/(loss) before tax                                             |  |      | 17,130 |      |  |     
|                                                                     |  |      |        |      |  |     
|Adjustments for:                                                     |  |      |        |      |  |     
|Interest income                                                      |  |      | (873   | )    |  |     
|Finance costs                                                        |  |      | 6,118  |      |  |     
|Exchange losses/(gains), net                                         |  |      | 143    |      |  |     
|Share of (profits)/losses of associates                              |  |      | (256   | )    |  |     
|Share of profit of a joint venture                                   |  |      | (1,647 | )    |  |     
|Investment income                                                    |  |      | (2,398 | )    |  |     
|Impairment and provision                                             |  |      | 2,746  |      |  |     
|Depreciation, depletion and amortization                             |  |      | 73,439 |      |  |     
|Loss on disposal and write-off of property, plant and equipment      |  |      | 2,115  |      |  |     
|Others                                                               |  |      | 70     |      |  |     
|Subtotal                                                             |  |      | 96,587 |      |  |     
|                                                                     |  |      |        |      |  |     
|                                                                     |  |      |        |      |  |     
|Decrease/(increase) in trade receivables and other current assets    |  |      | 7,932  |      |  |     
|Decrease in inventories and supplies                                 |  |      | 1,427  |      |  |     
|(Decrease)/increase in trade and accrued payables and other payables |  |      | (9,851 | )    |  |     
|                                                                     |  |      |        |      |  |     
|Cash generated from operations                                       |  |      | 96,095 |      |  |     



F-69





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 30. | NOTE TO THE CONSOLIDATED STATEMENT OF CASH FLOWS (continued)
| | --- | ------------------------------------------------------------



Reconciliation
of liabilities arising from financing activities



The table below details changes in the Group's liabilities
arising from financing activities, including both cash and non-cash changes. Liabilities arising from financing activities are
those for which cash flows were, or future cash flows will be, classified in the Group's consolidated statement of cash flows as
cash flows from financing activities.



|                             |  | Loans and borrowings |         | Interest payable |  | Dividend |        |      
|---------------------------- |  | -------------------- | ------- | ---------------- |  | -------- | ------ | -----
|                             |  | (Note 24)            |         | (Note 23)        |  | payable  |        | Total
|                             |  |                      |         |                  |  |          |        |      
|At January 1, 2017           |  |                      | 150,476 |                  |  |          | 1,244  |      
|Financing cash flows         |  |                      | (9,669  | )                |  |          | (5,154 | )    
|Foreign exchange translation |  |                      | (8,911  | )                |  |          | 51     |      
|Finance costs                |  |                      | 354     |                  |  |          | 5,040  |      
|Dividends declared           |  |                      | -       |                  |  |          | -      |      
|At December 31, 2017         |  |                      | 132,250 |                  |  |          | 1,181  |      



F-70





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 31. | COMMITMENTS AND CONTINGENCIES
| | --- | -----------------------------



| | (i) | Capital commitments
| | --- | -------------------



As
at December 31, 2017, the Group had the following capital commitments, principally for the construction of property, plant and
equipment:



|                                     |  | 2016 |        | 2017
|------------------------------------ |  | ---- | ------ | ----
|Contracted, but not provided for (1) |  |      | 46,515 |     










| | (1) | The capital commitments contracted, but not provided for, include the estimated payments to the Ministry of Land and Resources
of the PRC for the next five years with respect to the Group's exploration and production licenses.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
above table includes a commitment of approximately RMB4,030 million (December 31, 2016: RMB2,482 million) contracted with the CNOOC
Group.



Capital
commitments of a joint venture:



|                                 |  | 2016 |     | 2017
|-------------------------------- |  | ---- | --- | ----
|Contracted, but not provided for |  |      | 360 |     



As
at December 31, 2017, the Group had unutilized banking facilities amounting to approximatelyRMB53,749 million
(December 31, 2016: RMB60,697 million).



| | (ii) | Operating lease commitments
| | ---- | ---------------------------



| | a. | Office properties
| | -- | -----------------



The
Group leases certain of its office properties under operating lease arrangements. Leases for properties are negotiated for terms
ranging from 6 months to 20 years.



As
at December 31, 2017, the Group had total minimum lease payments under non-cancellable operating leases falling due as follows:



|                                                    |  | 2016 |       | 2017
|--------------------------------------------------- |  | ---- | ----- | ----
|                                                    |  |      |       |     
|Commitments due:                                    |  |      |       |     
|No later than one year                              |  |      | 1,317 |     
|Later than one year and not later than  two years   |  |      | 896   |     
|Later than two years and not later than  five years |  |      | 1,534 |     
|Later than five years                               |  |      | 1,963 |     
|                                                    |  |      |       |     
|                                                    |  |      | 5,710 |     



The
above table includes minimum lease payments of approximately RMB1,218 million (December 31, 2016: RMB639 million) to the CNOOC
Group.



F-71





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 31. | COMMITMENTS AND CONTINGENCIES (continued)
| | --- | -----------------------------------------



| | (ii) | Operating lease commitments (continued)
| | ---- | ---------------------------------------



| | a. | Office properties (continued)
| | -- | -----------------------------



Office
properties commitments of a joint venture:



|                                                   |  | 2016 |     | 2017
|-------------------------------------------------- |  | ---- | --- | ----
|                                                   |  |      |     |     
|Commitments due:                                   |  |      |     |     
|No later than one year                             |  |      | 25  |     
|Later than one year and not later than two years   |  |      | 17  |     
|Later than two years and not later than five years |  |      | 26  |     
|Later than five years                              |  |      | 51  |     
|                                                   |  |      | 119 |     



| | b. | Plant and equipment
| | -- | -------------------



The
Group leases certain of its plant and equipment under operating lease arrangements for a term from 1 year to 25 years.



As
at December 31, 2017, the Group had total minimum lease payments under non-cancellable operating leases falling due as follows:



|                                                   |  | 2016 |       | 2017
|-------------------------------------------------- |  | ---- | ----- | ----
|                                                   |  |      |       |     
|Commitments due:                                   |  |      |       |     
|No later than one year                             |  |      | 1,378 |     
|Later than one year and not later than two years   |  |      | 734   |     
|Later than two years and not later than five years |  |      | 1,316 |     
|Later than five years                              |  |      | 3,878 |     
|                                                   |  |      | 7,306 |     



The
above table includes a commitment of approximatelyRMB3,366 million (December 31,
2016: RMB3,211 million) to the CNOOC Group.



F-72







CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 31. | COMMITMENTS AND CONTINGENCIES (continued)
| | --- | -----------------------------------------



| | (iii) | Contingencies
| | ----- | -------------



| | (i) | Two oil spill accidents ( the “Penglai 19-3 Oilfield
Oil Spill Accidents”) occurred on June 4, and June 17, 2011 respectively at Platforms B and C of the Penglai 19-3 oilfield,
which is being operated under a production sharing contract (the “PSC”) among CNOOC China Limited, a subsidiary of
the Company, and two subsidiaries of ConocoPhillips, a U.S. based oil company, among which ConocoPhillips China Inc. (the “COPC”)
was the operator and responsible for the daily operations of the oilfield when the Penglai 19-3 Oilfield Oil Spill Accidents occurred.
| | --- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



On
August 10, 2015, the Company received a Notice Calling for Responses from the Qingdao Maritime Court of the People’s Republic
of China (the “Qingdao Maritime Court”) for a public interest action filed by China Biodiversity Conservation and Green
Development Foundation (the “Plaintiff”) in relation to the Penglai 19-3 Oilfield Oil Spill Accidents (the “Lawsuit”).
The Lawsuit is lodged against COPC and CNOOC China Limited. On February 2, 2018, CNOOC China Limited received a ruling dated December
28, 2017 issued by Qingdao Maritime Court (the "Ruling"). Pursuant to the Marine Environment Protection Law of the People’s
Republic of China amended in 2016, Qingdao Maritime Court ruled that the Plaintiff was not an appropriate entity to file Lawsuit,
and rejected it. As none of the parties to the Lawsuit appealed within the time limit, the Ruling came into effect. Therefore,
CNOOC China Limited bears no liability for the Lawsuit.



The
Company is of the view that there was no material financial impact of the Penglai 19-3 Oilfield Oil Spill Accidents on the Company.



| | (ii) | As a Chinese Resident Enterprise, the Company may be liable
to pay taxes on the deemed interest income for the funding provided to its overseas subsidiaries starting from January 1, 2008.
The Company has prepared contemporaneous documentation in accordance with applicable PRC tax laws and regulations and is currently
awaiting confirmation from its in-charge tax authority.
| | ---- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



The
Group is subject to tax in numerous jurisdictions around the world. There are audits in progress and items under review. Difference
in positions taken by taxation authorities over the interpretation and application of tax laws and regulations may increase the
Group's tax liability. Management has assessed the possible future outcome of matters that are currently under dispute. The Company
believes that an adequate provision for future tax liability has been included in the consolidated financial statements based on
available information.



In
addition to the matters mentioned above, the Group is dealing with a number of other lawsuits and arbitrations that arise in the
ordinary course of business. While the results of these legal proceedings cannot be ascertained at this stage, the Company believes
these proceedings are not expected to have a material effect on the consolidated financial statements.



F-73





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)

32.       FINANCIAL
INSTRUMENTS



Fair
value of financial instruments



The
Group enters into contracts to purchase and sell crude oil, natural gas and other energy commodities, and use derivative contracts,
including futures, forwards, swaps and options for hedging and trading purposes (collectively derivative contracts). The Group
also uses derivatives to manage foreign currency risk for non-trading purposes.



For
purposes of estimating the fair value of the derivative contracts, wherever possible, the Group utilizes quoted market price and,
if not available, estimates from third-party brokers. These brokers’ estimates are corroborated with multiple sources and/or
other observable market data utilizing assumptions that market participants would use when pricing the assets or liabilities, including
assumptions about risk and market liquidity.



The
carrying values of the Group’s cash and cash equivalents, time deposits, trade receivables, other current assets, short-term
loans, trade and accrued payables, other payables and accrued liabilities approximated to their fair values at the reporting date
due to the short maturity of these instruments.



The
carrying amount of the Group’s non-current non-publicly traded equity investments represents an appropriate estimate of their
fair values, as sufficient information is not available recently to measure their fair values as at December 31, 2017 and 2016.



The
fair value of the Group's long term bank loans with floating interest rates approximated to the carrying amount as at December
31, 2017 and 2016.



The
estimated fair value of the Group's long term guaranteed notes was approximatelyRMB128,315 million
as at December 31, 2017 (2016: RMB140,135 million), which was determined by reference to the market price as at December 31, 2017.



F-74





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 32. | FINANCIAL INSTRUMENTS (continued)
| | --- | ---------------------------------



Fair
value hierarchy



The
Group uses the following hierarchy that reflects the significance of the inputs used in making the fair value measurement:



Level
1: quoted prices (unadjusted) in active markets for identical assets or liabilities. Active markets are those in which transaction
occur in sufficient frequency and volume to provide pricing information on an on-going basis.



Level
2: fair value measurements are those derived from inputs other than quoted prices included within Level 1 that are observable for
the asset or liability, either directly or indirectly. Instruments in this category include non-exchange traded derivatives such
as over-the-counter physical forwards and options, including those that have prices similar to quoted market prices, private equity
funds and corporate wealth management products. The Group obtains information from sources of independent price publications, over-the-counter
broker quotes and the fund management’s quotations as at the reporting date.



Level
3: fair value measurements are those derived from valuation techniques that include inputs for the asset or liability that are
not based on observable market data (unobservable inputs), or where the observable data does not support the majority of the instruments
fair value.



As
at December 31, 2017 and December 31, 2016, the Group held the following financial instruments measured at fair value for each
hierarchy respectively:



|Assets measured at fair value              |  | December 31 2017 |        | Level 1 |  | Level 2 |       | Level 3
|------------------------------------------ |  | ---------------- | ------ | ------- |  | ------- | ----- | -------
|Other financial assets-current             |  |                  |        |         |  |         |       |        
|Corporate wealth management products       |  |                  | 66,229 |         |  |         | -     |        
|Money market funds                         |  |                  | 8,115  |         |  |         | 8,115 |        
|Derivative financial assets – current      |  |                  | -      |         |  |         | -     |        
|Equity investments                         |  |                  |        |         |  |         |       |        
|Non-publicly traded investments- current   |  |                  | 14     |         |  |         | -     |        
|Publicly traded investments-non current    |  |                  | 781    |         |  |         | 781   |        
|                                           |  |                  | 75,139 |         |  |         | 8,896 |        
|                                           |  |                  |        |         |  |         |       |        
|Liabilities measured at fair value         |  |                  |        |         |  |         |       |        
|Derivative financial liabilities – current |  |                  | -      |         |  |         | -     |        

F-75





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 32. | FINANCIAL INSTRUMENTS (continued)
| | --- | ---------------------------------



Fair
value hierarchy (continued)



|Assets measured at fair value              |  | December 31 2016 |        | Level 1 |  | Level 2 |       | Level 3
|------------------------------------------ |  | ---------------- | ------ | ------- |  | ------- | ----- | -------
|Other financial assets-current             |  |                  |        |         |  |         |       |        
|Corporate wealth management products       |  |                  | 46,958 |         |  |         | -     |        
|Money market funds                         |  |                  | 5,931  |         |  |         | 5,931 |        
|Derivative financial assets – current      |  |                  | 428    |         |  |         | -     |        
|Equity investments                         |  |                  |        |         |  |         |       |        
|Non-publicly traded investments- current   |  |                  | 15     |         |  |         | -     |        
|Publicly traded investments-non current    |  |                  | 1,391  |         |  |         | 1,391 |        
|                                           |  |                  | 54,723 |         |  |         | 7,322 |        
|                                           |  |                  |        |         |  |         |       |        
|Liabilities measured at fair value         |  |                  |        |         |  |         |       |        
|Derivative financial liabilities – current |  |                  | (426   | )       |  |         | -     |        



For
financial assets and liabilities arising from derivative contracts, inputs may be readily observable, market-corroborated or generally
unobservable. The Group utilizes valuation techniques that seek to maximize the use of observable inputs and minimize the use of
unobservable inputs. To value longer term transactions and transactions in less active markets for which pricing information is
not generally available, unobservable inputs may be used.



No
amounts have been transferred between the different levels of the fair value hierarchy for the year.



F-76





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 33. | CONCENTRATION OF CUSTOMERS
| | --- | --------------------------



A
substantial portion of the Group's oil and gas commodities sales to third-party customers is made to a small number of customers
on credit. Details of the gross sales to these top five third party customers are as follows:



|                                        |  | 2015 |        | 2016 |  | 2017
|--------------------------------------- |  | ---- | ------ | ---- |  | ----
|China Petroleum & Chemical Corporation* |  |      | 14,692 |      |  |     
|PetroChina Company Limited*             |  |      | 5,502  |      |  |     
|BP p.l.c.                               |  |      | 3,093  |      |  |     
|Phillips 66                             |  |      | N/A    |      |  |     
|Royal Dutch Shell PLC                   |  |      | 6,917  |      |  |     
|EOG Resources, Inc.                     |  |      | 3,746  |      |  |     














| | * | These transactions are with other state-owned enterprises.
| | - | ----------------------------------------------------------



| | 34. | FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES
| | --- | -------------------------------------------------



The Group's principal financial
instruments comprise bank loans, long term guaranteed notes, equity investment and other financial assets, cash and short term
deposits. The Group has various other financial assets and liabilities such as trade
receivables, trade and accrued payables, which arise directly from its operations.



The Group is exposed to credit
risk, oil and gas price risk, currency risk, interest rate risk and liquidity risk.



The Group's senior management
oversees the management of these risks. The Group's senior management is supported by various departments that advise on financial
risks and the appropriate financial risks governance framework for the Group. Those departments provide assurance to the Group's
senior management that the Group's financial risk-taking activities are governed by
appropriate policies and procedures and that financial risks are identified, measured and managed in accordance with group policies
and group risk appetite.



F-77





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 34. | FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
| | --- | -------------------------------------------------------------



| | (i) | Credit risk
| | --- | -----------



The carrying amounts of the
Group's cash and cash equivalents, time deposits, money market funds and corporate wealth management products, trade receivables
and other receivables, and other current assets except for prepayments represent the Group's maximum exposure to credit risk in
relation to its financial assets.



The significant portion of
the Group's trade receivables is related to the sale of oil and natural gas to third party customers. The Group performs ongoing
credit evaluations of the customers' financial condition and collateral may be required from customers. The Group made an impairment
allowance on doubtful receivables and actual losses have been within management's expectation.



Concentrations of credit risk
are managed by customer/counterparty and by geographical region. At December 31, 2017, the Group has certain concentrations of
credit risk as 0.16% (2016: 1%) and 7.63% (2016: 5%) of the Group's trade receivables were due from the Group's largest third-party
customer and the five largest third-party customers, respectively.



No other
financial assets carry a significant exposure to credit risk.



| | (ii) | Oil and gas price risk
| | ---- | ----------------------



Since the Group makes reference
to international oil prices to determine its realized oil price, fluctuations in international oil price would have a significant
impact on the Group's sales revenue, profit, assets value and cashflow. In addition, certain of the Group's natural gas sales contracts
contain price adjustment provisions. Any changes in international oil prices, inflation rate and domestic natural gas price policies
may result in changes in natural gas prices, which will affect the Group's profitability. In North America, the majority of the
Group's oil and gas production is sold under short-term contracts, exposing the Group to the risk of price movements. Other energy
contracts the Group enters into also expose the Group to oil and gas price risk between the time the Group purchases and sells
contracted volumes.



| | (iii) | Currency risk
| | ----- | -------------



Substantially all of the Group's
oil and gas sales are denominated in Renminbi and United States dollars ("US dollars"). Starting from July 21, 2005,
China reformed the exchange rate regime by moving into a managed floating exchange rate regime based on market supply and demand
with reference to a basket of currencies. Renminbi would no longer be pegged to the US dollars. From January 1, 2017 to December
31, 2017 (the last working day in 2017), Renminbi has appreciated by approximately 6.16% (December
31,2016: depreciated by approximately 6.39%) against the US dollars. At December 31, 2017, approximately 82% (December
31, 2016: 88%, December 31,2015: 89%) of the Group's cash and cash equivalents and
time deposits with maturity over three months were denominated in Renminbi, and the remaining amounts were substantially denominated
in US dollars and Hong Kong dollars. The Group also has exposures to currencies other than the US dollars, such as Canadian dollar
and British Pounds as such exposures are considered insignificant.



F-78





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 34. | FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
| | --- | -------------------------------------------------------------



| | (iii) | Currency risk (continued)
| | ----- | -------------------------



Management has assessed the
Group's exposure to foreign currency risk by using a sensitivity analysis on the change in foreign exchange rate of the US dollars,
to which the Group is mainly exposed to as at December 31, 2017 and 2016. Based on management's assessment at December 31, 2017,
a 5% strengthening/weakening of RMB against US dollars would have increased/decreased the profit for the year of the Group by 0.06%
(December 31, 2016: 6.63%) and the equity of the Group by 0.31% (December 31, 2016: 0.46%). This analysis has been determined assuming
that the change in foreign exchange rates had occurred at the end of the reporting period and had been applied to the foreign currency
balances to which the Group has significant exposure with all other variables held constant. The analysis is performed on the same
basis for 2016.



Senior management is closely
monitoring the Group's net exposure to foreign currency risk. The appreciation of Renminbi against the US dollars may have the
following impact on the Group. On one hand, since the benchmark oil and gas prices are usually in US dollars against Renminbi,
the Group's oil and gas sales may decrease due to the depreciation of the US dollars against Renminbi. On the other hand, the depreciation
of the US dollars against Renminbi will also decrease the Group's costs for imported equipment and materials, most of which are
denominated in the US dollars. In addition, the debt repayment by the Group will decrease since all of the Group’s interest-bearing
debts are also denominated in the US dollars.



| | (iv) | Interest rate risk
| | ---- | ------------------



The interest rate risk is closely
monitored by the Group's senior management. As at the end of 2017, the interest rates for 95.5% of the Group's debts were fixed.
Apart from borrowing for Tangguh LNG Project, all of the Group's long term debts are fixed rate. The weighted average term of the
Group's debt balance outstanding was approximately 9.35 years. The fixed interest rates can reduce the volatility of finance costs
under uncertain environments and the Group's exposure to changes in interest rates is not expected to be material.



| | (v) | Liquidity risk
| | --- | --------------



The Group manages its liquidity
risk by regularly monitoring its liquidity requirements and its compliance with debt covenants to ensure that it maintains sufficient
cash and cash equivalents, and readily realizable equity investments and other financial assets, and adequate time deposits to
meet its liquidity requirements in the short and long term. In addition, bank facilities have been put in place for contingency
purposes.



The Group's trade and accrued
payables, other payables and accrued liabilities are all due for settlement within six months after the reporting date.

F-79





CNOOC LIMITED



NOTES TO CONSOLIDATED FINANCIAL STATEMENTS



(All amounts expressed in millions of
Renminbi unless otherwise stated)



| | 34. | FINANCIAL RISK MANAGEMENT OBJECTIVES AND POLICIES (continued)
| | --- | -------------------------------------------------------------



| | (vi) | Capital management
| | ---- | ------------------



The primary objectives of the
Group's capital management are to safeguard the Group's ability to continue as a going concern and to maintain healthy capital
ratios in order to support its business and maximize shareholders' value.



The Group manages its capital
structure and makes adjustments to it in light of changes in economic conditions. To maintain or adjust the capital structure,
the Group may return capital to shareholders, raise new debt or issue new shares. No changes were made in the objectives, policies
or processes for managing capital during the years end December 31, 2015, 2016 and 2017.



The Group monitors capital
on the basis of the debt to capital ratio, which is calculated as interest-bearing debts divided by total capital (equity attributable
to owners of the parent plus interest-bearing debts).



|                                            |  | 2015 |         | 2016 |  | 2017
|------------------------------------------- |  | ---- | ------- | ---- |  | ----
|                                            |  |      |         |      |  |     
|Interest-bearing debts                      |  |      | 164,645 |      |  |     
|Equity attributable to owners of the parent |  |      | 386,041 |      |  |     
|Total capital                               |  |      | 550,686 |      |  |     
|Gearing ratio                               |  |      | 29.9    | %    |  |     



| | 35. | CHARGE OF ASSETS
| | --- | ----------------



CNOOC
NWS Private Limited, a wholly-owned subsidiary of the Group, together with the other joint venture partners and the operator of
the NWS Project, signed a Deed of Cross Charge and an Extended Deed of Cross Charge whereby certain liabilities incurred or to
be incurred, if any, by the Company in respect of the NWS Project are secured by its interest in the NWS Project.



| | 36. | SUBSEQUENT EVENTS
| | --- | -----------------



The
Group has no significant subsequent events needed to be disclosed in the consolidated financial statements.



| | 37. | APPROVAL OF THE FINANCIAL STATEMENTS
| | --- | ------------------------------------



The
consolidated financial statements were approved and authorized for issue by the Board of Directors on March 29, 2018.



F-80





|CNOOC
LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND
GAS PRODUCING ACTIVITIES

(UNAUDITED)

(All amounts expressed in millions of
Renminbi unless otherwise stated)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------









The following disclosures are included
in accordance with the FASB Accounting Standard Codification 932 “Extractive Activities-Oil and Gas (the “ASC 932”).



The regional analysis presented below is
on a continent basis, with separate disclosure for countries that contain 15% or more of the total proved reserve, in accordance
with SEC and FASB requirements.



| | (a) | Reserve quantity information
| | --- | ----------------------------



Crude oil and natural gas reserve
estimates are determined through analysis of geological and engineering data which appear, with reasonable certainty, to be economically
producible in the future from known oil and natural gas reservoirs under existing economic and operating conditions. The reserve
data that we disclosed were all based on the definitions and disclosure guidelines contained in the US Securities and Exchange
Commission’s final rules on “Modernization of oil and Gas Reporting” (the “SEC Final Rule”).



For the years 2017, 2016 and
2015, approximately 65%, 60% and 62%, respectively, of our total proved reserves were evaluated by us, and the remaining were evaluated
by independent third parties.



We implemented rigorous internal
control system that monitors the entire reserves estimation process and certain key metrics in order to ensure that the process
and results of reserves estimates fully comply with the relevant SEC rules.



We established the Reserve Management
Committee (the “RMC”), which is led by one of our Executive Vice Presidents and comprises the general managers of the
relevant departments.



The RMC’s main responsibilities
are to:



| | • | review our reserves policies;
| | - | -----------------------------



| | • | review our proved reserves and other categories of reserves; and
| | - | ----------------------------------------------------------------



| | • | select our reserves estimators and auditors.
| | - | --------------------------------------------



The RMC follows certain procedures
to appoint our internal reserves estimators and reserves auditors, who are required to have undergraduate degrees and at least
five years and ten years of experience related to reserves estimation, respectively.



The reserves estimators and
auditors are required to be members of a professional society, such as China Petroleum Society (CPS), and are required to take
the professional trainings and examinations as required by the professional society and us.



The RMC delegates its daily
operation to our Reserves Office, which is led by our Chief Reserve Supervisor. The Reserves Office is mainly responsible for supervising
reserves estimates and auditing. It reports to the RMC periodically and is independent from operating divisions such as the exploration,
development and production departments. Our Chief Reserve Supervisor has more than 35 years’ experience in oil and gas industry.



The Group’s net proved
reserves consist of its interest in reserves, comprised of a 100% interest in its independent oil and gas properties and its participating
interest in the properties covered under the production sharing contracts in the PRC, less (i) an adjustment for the Group’s
share of royalties payable by the Group to the PRC government and the Group’s participating interest in share oil payable
to the PRC government under the production sharing contracts, and less (ii) an adjustment for production allocable to foreign partners
under the PRC production sharing contracts as reimbursement for exploration expenses attributable to the Group’s participating
interest, and plus the participating interest in the properties covered under the production sharing contracts in oversea countries,
less adjustments, if any, of share oil attributable to the host government and the domestic market obligation.



F-81





|CNOOC
LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND
GAS PRODUCING ACTIVITIES

(UNAUDITED)

(All amounts expressed in millions of
Renminbi unless otherwise stated)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------





Pursuant to SEC Final Rule,
the Group uses the average, first-day-of-the-month oil price during the 12-month period before the ending date of the period covered
by the consolidated financial statements to estimate its proved oil and gas reserves.



The Company determines its net
entitlement oil and gas reserves under production sharing contracts using the economic interest method.



Proved developed and undeveloped
reserves:





|                                 | PRC      | Asia
    (excluding PRC) | Oceania  | Africa          | Canada   | North
    America (excluding Canada) | South
    America | Europe          | Total   
|-------------------------------- | -------- | ------------------------ | -------- | --------------- | -------- | ------------------------------------ | ----------------- | --------------- | --------
|                                 | Oil      | Natural
    gas          | Oil      | Natural
    gas | Oil      | Natural
    gas                      | Oil               | Natural
    gas | Oil     
|                                 | (mmbbls) | (bcf)                    | (mmbbls) | (bcf)           | (mmbbls) | (bcf)                                | (mmbbls)          | (bcf)           | (mmbbls)
|                                 |          |                          |          |                 |          |                                      |                   |                 |         
|Consolidated
    entities        |          |                          |          |                 |          |                                      |                   |                 |         
|31 December 2014                 | 1,692    | 4,757                    | 47       | 861             | 17       | 456                                  | 143               | –               | –       
|                                 |          |                          |          |                 |          |                                      |                   |                 |         
|Purchase/(Disposal) of reserves  | –        | –                        | –        | –               | –        | –                                    | –                 | –               | –       
|Discoveries and extensions       | 267      | 1,491                    | –        | 10              | –        | –                                    | 3                 | –               | –       
|Improved Recovery                | –        | –                        | –        | –               | –        | –                                    | –                 | –               | –       
|Production                       | (278)    | (267)                    | (17)     | (51)            | (1)      | (34)                                 | (31)              | –               | –       
|Revisions of
    prior estimates | (250)    | (626)                    | 29       | 26              | (1)      | (32)                                 | 52                | –               | –       
|                                 |          |                          |          |                 |          |                                      |                   |                 |         
|31 December 2015                 | 1,431    | 5,355                    | 60       | 846             | 15       | 389                                  | 167               | –               | –       
|                                 |          |                          |          |                 |          |                                      |                   |                 |         
|Purchase/(Disposal) of reserves  | –        | –                        | –        | –               | –        | –                                    | –                 | –               | –       
|Discoveries and extensions       | 167      | 897                      | –        | –               | –        | –                                    | 1                 | –               | –       
|Improved Recovery                | –        | –                        | –        | –               | –        | –                                    | –                 | –               | –       
|Production                       | (271)    | (237)                    | (18)     | (55)            | (2)      | (41)                                 | (29)              | –               | –       
|Revisions of
    prior estimates | 119      | (170)                    | 35       | 162             | (1)      | (15)                                 | –                 | –               | –       
|                                 |          |                          |          |                 |          |                                      |                   |                 |         
|31 December 2016                 | 1,446    | 5,844                    | 77       | 952             | 12       | 333                                  | 138               | –               | –       
|                                 |          |                          |          |                 |          |                                      |                   |                 |         
|Purchase/(Disposal) of reserves  | 3        | 1                        | –        | –               | –        | –                                    | –                 | –               | –       
|Discoveries and extensions       | 112      | 250                      | –        | –               | –        | –                                    | –                 | –               | –       
|Improved Recovery                | –        | –                        | –        | –               | –        | –                                    | –                 | –               | –       
|Production                       | (258)    | (262)                    | (21)     | (52)            | (1)      | (35)                                 | (27)              | –               | –       
|Revisions of
    prior estimates | 325      | 77                       | 14       | (16)            | –        | (1)                                  | 26                | –               | –       
|                                 |          |                          |          |                 |          |                                      |                   |                 |         
|31 December 2017                 | 1,627    | 5,911                    | 70       | 885             | 11       | 297                                  | 137               | –               | –       
|                                 |          |                          |          |                 |          |                                      |                   |                 |         



For explanation of significant changes in proved reserve, please refer to section “Item 4.B. Business
Overview” for more details.



|Enterprise’s
share of equity method investees:      |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |     |      |   |   |     |      |   |  
|--------------------------------------------------- | - | --- | - | - | - | - | - | - | - | - | - | - | - | - | - | - | --- | ---- | - | - | --- | ---- | - | -
|31 December 2014                                    | 1 | 3   | – | – | – | – | – | – | – | – | – | – | – | – | – | – | 200 | 534  | – | – | 200 | 537  | – | –
|                                                    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |     |      |   |   |     |      |   |  
|Purchase/(Disposal) of reserves                     | – | –   | – | – | – | – | – | – | – | – | – | – | – | – | – | – | –   | –    | – | – | –   | –    | – | –
|Discoveries and extensions                          | – | –   | – | – | – | – | – | – | – | – | – | – | – | – | – | – | 3   | 67   | – | – | 3   | 67   | – | –
|Improved Recovery                                   | – | 5   | – | – | – | – | – | – | – | – | – | – | – | – | – | – | 1   | 2    | – | – | 1   | 7    | – | –
|Production                                          | – | (2) | – | – | – | – | – | – | – | – | – | – | – | – | – | – | (9) | (53) | – | – | (9) | (55) | – | –
|Revisions of prior estimates                        | – | –   | – | – | – | – | – | – | – | – | – | – | – | – | – | – | 5   | 21   | – | – | 5   | 21   | – | –
|                                                    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |     |      |   |   |     |      |   |  
|31 December 2015                                    | 1 | 6   | – | – | – | – | – | – | – | – | – | – | – | – | – | – | 199 | 570  | – | – | 200 | 577  | – | –
|                                                    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |     |      |   |   |     |      |   |  
|Purchase/(Disposal) of reserves                     | – | –   | – | – | – | – | – | – | – | – | – | – | – | – | – | – | –   | –    | – | – | –   | –    | – | –
|Discoveries and extensions                          | – | 1   | – | – | – | – | – | – | – | – | – | – | – | – | – | – | 5   | 33   | – | – | 5   | 35   | – | –
|Improved Recovery                                   | – | –   | – | – | – | – | – | – | – | – | – | – | – | – | – | – | –   | 2    | – | – | –   | 2    | – | –
|Production                                          | – | (2) | – | – | – | – | – | – | – | – | – | – | – | – | – | – | (8) | (55) | – | – | (8) | (57) | – | –
|Revisions of prior estimates                        | – | 1   | – | – | – | – | – | – | – | – | – | – | – | – | – | – | (3) | 17   | – | – | (2) | 18   | – | –
|                                                    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |     |      |   |   |     |      |   |  
|31 December 2016                                    | 1 | 7   | – | – | – | – | – | – | – | – | – | – | – | – | – | – | 195 | 567  | – | – | 195 | 574  | – | –
|                                                    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |     |      |   |   |     |      |   |  
|Purchase/(Disposal) of reserves                     | – | –   | – | – | – | – | – | – | – | – | – | – | – | – | – | – | 49  | 140  | – | – | 49  | 140  | – | –
|Discoveries and extensions                          | – | –   | – | – | – | – | – | – | – | – | – | – | – | – | – | – | 8   | 34   | – | – | 8   | 34   | – | –
|Improved Recovery                                   | – | –   | – | – | – | – | – | – | – | – | – | – | – | – | – | – | 1   | 23   | – | – | 1   | 23   | – | –
|Production                                          | – | (2) | – | – | – | – | – | – | – | – | – | – | – | – | – | – | (8) | (52) | – | – | (8) | (53) | – | –
|Revisions of prior estimates                        | – | 1   | – | – | – | – | – | – | – | – | – | – | – | – | – | – | (1) | (11) | – | – | –   | (11) | – | –
|                                                    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |     |      |   |   |     |      |   |  
|31 December 2017                                    | 1 | 6   | – | – | – | – | – | – | – | – | – | – | – | – | – | – | 244 | 701  | – | – | 245 | 707  | – | –
|                                                    |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |     |      |   |   |     |      |   |  
|Total
consolidated and equity Interests in reserves |   |     |   |   |   |   |   |   |   |   |   |   |   |   |   |   |     |      |   |   |     |      |   |  









F-82







|CNOOC
LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND
GAS PRODUCING ACTIVITIES

(UNAUDITED)

(All amounts expressed in millions of
Renminbi unless otherwise stated)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------







|31 December 2015 | 1,431 | 5,361 | 60 | 846 | 15 | 389 | 167 | – | – | 119 | 815 | –   | 239 | 275 | – | – | 201 | 570 | 102 | 9 | 2,215 | 7,570 | 815 | –  
|---------------- | ----- | ----- | -- | --- | -- | --- | --- | - | - | --- | --- | --- | --- | --- | - | - | --- | --- | --- | - | ----- | ----- | --- | ---
|31 December 2016 | 1,446 | 5,850 | 77 | 952 | 12 | 333 | 138 | – | – | –   | 301 | –   | 260 | 350 | – | – | 196 | 567 | 81  | 7 | 2,211 | 8,060 | 301 | –  
|31 December 2017 | 1,628 | 5,916 | 70 | 885 | 11 | 297 | 137 | – | – | 24  | 786 | 118 | 282 | 421 | – | – | 324 | 701 | 88  | 5 | 2,540 | 8,250 | 786 | 118



Proved developed reserves:





|                                                                       | PRC      | Asia(excluding
    PRC) | Oceania  | Africa          | Canada   | North
    America (excluding Canada) | South
    America | Europe          | Total   
|---------------------------------------------------------------------- | -------- | ----------------------- | -------- | --------------- | -------- | ------------------------------------ | ----------------- | --------------- | --------
|                                                                       | Oil      | Natural
    gas         | Oil      | Natural
    gas | Oil      | Natural
    gas                      | Oil               | Natural
    gas | Oil     
|                                                                       | (mmbbls) | (bcf)                   | (mmbbls) | (bcf)           | (mmbbls) | (bcf)                                | (mmbbls)          | (bcf)           | (mmbbls)
|                                                                       |          |                         |          |                 |          |                                      |                   |                 |         
|Consolidated entities                                                  |          |                         |          |                 |          |                                      |                   |                 |         
|31 December 2015                                                       | 809      | 1,757                   | 40       | 439             | 10       | 273                                  | 53                | –               | –       
|31 December 2016                                                       | 815      | 1,623                   | 51       | 618             | 10       | 268                                  | 41                | –               | –       
|31 December 2017                                                       | 893      | 1,574                   | 35       | 558             | 8        | 230                                  | 37                | –               | –       
|                                                                       |          |                         |          |                 |          |                                      |                   |                 |         
|Enterprise’s
        share of equity
        method
        investees: |          |                         |          |                 |          |                                      |                   |                 |         
|31 December 2015                                                       | 1        | 6                       | –        | –               | –        | –                                    | –                 | –               | –       
|31 December 2016                                                       | 1        | 7                       | –        | –               | –        | –                                    | –                 | –               | –       
|31 December 2017                                                       | 1        | 6                       | –        | –               | –        | –                                    | –                 | –               | –       







F-83





|CNOOC
LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND
GAS PRODUCING ACTIVITIES

(UNAUDITED)

(All amounts expressed in millions of
Renminbi unless otherwise stated)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------









Proved undeveloped reserves:







|                                                                       | PRC      | Asia(excluding
    PRC) | Oceania  | Africa          | Canada   | North
    America (excluding Canada) | South
    America | Europe          | Total   
|---------------------------------------------------------------------- | -------- | ----------------------- | -------- | --------------- | -------- | ------------------------------------ | ----------------- | --------------- | --------
|                                                                       | Oil      | Natural
    gas         | Oil      | Natural
    gas | Oil      | Natural
    gas                      | Oil               | Natural
    gas | Oil     
|                                                                       | (mmbbls) | (bcf)                   | (mmbbls) | (bcf)           | (mmbbls) | (bcf)                                | (mmbbls)          | (bcf)           | (mmbbls)
|                                                                       |          |                         |          |                 |          |                                      |                   |                 |         
|Consolidated entities                                                  |          |                         |          |                 |          |                                      |                   |                 |         
|31 December 2015                                                       | 622      | 3,598                   | 20       | 406             | 5        | 116                                  | 114               | –               | –       
|31 December 2016                                                       | 631      | 4,221                   | 26       | 334             | 2        | 66                                   | 97                | –               | –       
|31 December 2017                                                       | 734      | 4,336                   | 35       | 327             | 2        | 68                                   | 100               | –               | –       
|                                                                       |          |                         |          |                 |          |                                      |                   |                 |         
|Enterprise’s
        share of equity
        method
        investees: |          |                         |          |                 |          |                                      |                   |                 |         
|31 December 2015                                                       | –        | –                       | –        | –               | –        | –                                    | –                 | –               | –       
|31 December 2016                                                       | –        | –                       | –        | –               | –        | –                                    | –                 | –               | –       
|31 December 2017                                                       | –        | –                       | –        | –               | –        | –                                    | –                 | –               | –       







| | (b) | Results of operations
| | --- | ---------------------







2015

Consolidated entities







|                                                         |  | PRC |         | Asia (excluding PRC) |  | Oceania |        | Africa |  | Canada |       | North America (excluding Canada) |  | South America |        | Europe |  | Total
|-------------------------------------------------------- |  | --- | ------- | -------------------- |  | ------- | ------ | ------ |  | ------ | ----- | -------------------------------- |  | ------------- | ------ | ------ |  | -----
|Net sales to customers                                   |  |     | 106,258 |                      |  |         | 7,258  |        |  |        | 1,079 |                                  |  |               | 9,723  |        |  |      
|Operating expenses                                       |  |     | (15,984 | )                    |  |         | (2,562 | )      |  |        | (420  | )                                |  |               | (1,271 | )      |  |      
|Taxes other than income tax                              |  |     | (9,498  | )                    |  |         | —      |        |  |        | (131  | )                                |  |               | (459   | )      |  |      
|Exploration expense                                      |  |     | (4,415  | )                    |  |         | (937   | )      |  |        | (50   | )                                |  |               | (885   | )      |  |      
|Accretion expense                                        |  |     | (1,882  | )                    |  |         | —      |        |  |        | —     |                                  |  |               | (93    | )      |  |      
|Depreciation, depletion and amortisation, and impairment |  |     | (40,082 | )                    |  |         | (3,193 | )      |  |        | (135  | )                                |  |               | (9,898 | )      |  |      
|Special oil gain levy                                    |  |     | (59     | )                    |  |         | —      |        |  |        | —     |                                  |  |               | —      |        |  |      
|                                                         |  |     |         |                      |  |         |        |        |  |        |       |                                  |  |               |        |        |  |      
|                                                         |  |     | 34,338  |                      |  |         | 566    |        |  |        | 343   |                                  |  |               | (2,883 | )      |  |      
|                                                         |  |     |         |                      |  |         |        |        |  |        |       |                                  |  |               |        |        |  |      
|Income tax expense                                       |  |     | (8,584  | )                    |  |         | (764   | )      |  |        | (103  | )                                |  |               | 186    |        |  |      
|                                                         |  |     |         |                      |  |         |        |        |  |        |       |                                  |  |               |        |        |  |      
|Result of operations                                     |  |     | 25,574  |                      |  |         | (198   | )      |  |        | 240   |                                  |  |               | (2,697 | )      |  |      











F-84





|CNOOC
LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND
GAS PRODUCING ACTIVITIES

(UNAUDITED)

(All amounts expressed in millions of
Renminbi unless otherwise stated)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------





2015

Enterprise’s share of
equity method investees:











|                                                         |  | PRC |        | Asia (excluding PRC) |  | Oceania |      | Africa |  | Canada |     | North America (excluding Canada) |  | South America |        | Europe |  | Total
|-------------------------------------------------------- |  | --- | ------ | -------------------- |  | ------- | ---- | ------ |  | ------ | --- | -------------------------------- |  | ------------- | ------ | ------ |  | -----
|Net sales to customers                                   |  |     | 200    |                      |  |         | —    |        |  |        | —   |                                  |  |               | —      |        |  |      
|Operating expenses                                       |  |     | (139   | )                    |  |         | —    |        |  |        | —   |                                  |  |               | —      |        |  |      
|Taxes other than income tax                              |  |     | (11    | )                    |  |         | —    |        |  |        | —   |                                  |  |               | —      |        |  |      
|Exploration expense                                      |  |     | (59    | )                    |  |         | —    |        |  |        | —   |                                  |  |               | —      |        |  |      
|Accretion expense                                        |  |     | (6     | )                    |  |         | —    |        |  |        | —   |                                  |  |               | —      |        |  |      
|Depreciation, depletion and amortisation, and impairment |  |     | (109   | )                    |  |         | —    |        |  |        | —   |                                  |  |               | —      |        |  |      
|Special oil gain levy                                    |  |     | —      |                      |  |         | —    |        |  |        | —   |                                  |  |               | —      |        |  |      
|                                                         |  |     |        |                      |  |         |      |        |  |        |     |                                  |  |               |        |        |  |      
|                                                         |  |     | (124   | )                    |  |         | —    |        |  |        | —   |                                  |  |               | —      |        |  |      
|                                                         |  |     |        |                      |  |         |      |        |  |        |     |                                  |  |               |        |        |  |      
|Income tax expense                                       |  |     | 19     |                      |  |         | —    |        |  |        | —   |                                  |  |               | —      |        |  |      
|                                                         |  |     |        |                      |  |         |      |        |  |        |     |                                  |  |               |        |        |  |      
|Result of operations                                     |  |     | (105   | )                    |  |         | —    |        |  |        | —   |                                  |  |               | —      |        |  |      
|                                                         |  |     |        |                      |  |         |      |        |  |        |     |                                  |  |               |        |        |  |      
|Total result of operations for producing activities      |  |     | 25,649 |                      |  |         | (198 | )      |  |        | 240 |                                  |  |               | (2,697 | )      |  |      















2016

Consolidated entities















|                                                         |  | PRC |         | Asia (excluding PRC) |  | Oceania |        | Africa |  | Canada |       | North America (excluding Canada) |  | South America |         | Europe |  | Total
|-------------------------------------------------------- |  | --- | ------- | -------------------- |  | ------- | ------ | ------ |  | ------ | ----- | -------------------------------- |  | ------------- | ------- | ------ |  | -----
|Net sales to customers                                   |  |     | 87,276  |                      |  |         | 6,186  |        |  |        | 1,285 |                                  |  |               | 8,358   |        |  |      
|Operating expenses                                       |  |     | (13,704 | )                    |  |         | (2,214 | )      |  |        | (503  | )                                |  |               | (1,168  | )      |  |      
|Taxes other than income tax                              |  |     | (5,885  | )                    |  |         | —      |        |  |        | (139  | )                                |  |               | (384    | )      |  |      
|Exploration expense                                      |  |     | (3,499  | )                    |  |         | (9     | )      |  |        | (37   | )                                |  |               | (117    | )      |  |      
|Accretion expense                                        |  |     | (1,535  | )                    |  |         | —      |        |  |        | —     |                                  |  |               | (114    | )      |  |      
|Depreciation, depletion and amortisation, and impairment |  |     | (35,327 | )                    |  |         | (4,020 | )      |  |        | (190  | )                                |  |               | (11,651 | )      |  |      
|Special oil gain levy                                    |  |     | —       |                      |  |         | —      |        |  |        | —     |                                  |  |               | —       |        |  |      
|                                                         |  |     |         |                      |  |         |        |        |  |        |       |                                  |  |               |         |        |  |      
|                                                         |  |     | 27,326  |                      |  |         | (57    | )      |  |        | 416   |                                  |  |               | (5,076  | )      |  |      
|                                                         |  |     |         |                      |  |         |        |        |  |        |       |                                  |  |               |         |        |  |      
|Income tax expense                                       |  |     | (6,832  | )                    |  |         | 18     |        |  |        | (125  | )                                |  |               | 1,345   |        |  |      
|                                                         |  |     |         |                      |  |         |        |        |  |        |       |                                  |  |               |         |        |  |      
|Result of operations                                     |  |     | 20,494  |                      |  |         | (39    | )      |  |        | 291   |                                  |  |               | (3,731  | )      |  |      







F-85





|CNOOC
LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND
GAS PRODUCING ACTIVITIES

(UNAUDITED)

(All amounts expressed in millions of
Renminbi unless otherwise stated)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------





2016

Enterprise’s share of
equity method investees:











|                                                         |  | PRC |        | Asia (excluding PRC) |  | Oceania |     | Africa |  | Canada |     | North America (excluding Canada) |  | South America |        | Europe |  | Total
|-------------------------------------------------------- |  | --- | ------ | -------------------- |  | ------- | --- | ------ |  | ------ | --- | -------------------------------- |  | ------------- | ------ | ------ |  | -----
|Net sales to customers                                   |  |     | 187    |                      |  |         | —   |        |  |        | —   |                                  |  |               | —      |        |  |      
|Operating expenses                                       |  |     | (84    | )                    |  |         | —   |        |  |        | —   |                                  |  |               | —      |        |  |      
|Taxes other than income tax                              |  |     | (10    | )                    |  |         | —   |        |  |        | —   |                                  |  |               | —      |        |  |      
|Exploration expense                                      |  |     | (10    | )                    |  |         | —   |        |  |        | —   |                                  |  |               | —      |        |  |      
|Accretion expense                                        |  |     | (8     | )                    |  |         | —   |        |  |        | —   |                                  |  |               | —      |        |  |      
|Depreciation, depletion and amortisation, and impairment |  |     | (133   | )                    |  |         | —   |        |  |        | —   |                                  |  |               | —      |        |  |      
|Special oil gain levy                                    |  |     | —      |                      |  |         | —   |        |  |        | —   |                                  |  |               | —      |        |  |      
|                                                         |  |     |        |                      |  |         |     |        |  |        |     |                                  |  |               |        |        |  |      
|                                                         |  |     | (58    | )                    |  |         | —   |        |  |        | —   |                                  |  |               | —      |        |  |      
|                                                         |  |     |        |                      |  |         |     |        |  |        |     |                                  |  |               |        |        |  |      
|Income tax expense                                       |  |     | 9      |                      |  |         | —   |        |  |        | —   |                                  |  |               | —      |        |  |      
|                                                         |  |     |        |                      |  |         |     |        |  |        |     |                                  |  |               |        |        |  |      
|Result of operations                                     |  |     | (49    | )                    |  |         | —   |        |  |        | —   |                                  |  |               | —      |        |  |      
|                                                         |  |     |        |                      |  |         |     |        |  |        |     |                                  |  |               |        |        |  |      
|Total result of operations for producing activities      |  |     | 20,445 |                      |  |         | (39 | )      |  |        | 291 |                                  |  |               | (3,731 | )      |  |      















2017

Consolidated entities





|                                                         |  | PRC |         | Asia (excluding PRC) |  | Oceania |        | Africa |  | Canada |       | North America (excluding Canada) |  | South America |         | Europe |  | Total
|-------------------------------------------------------- |  | --- | ------- | -------------------- |  | ------- | ------ | ------ |  | ------ | ----- | -------------------------------- |  | ------------- | ------- | ------ |  | -----
|Net sales to customers                                   |  |     | 107,887 |                      |  |         | 9,085  |        |  |        | 1,283 |                                  |  |               | 9,722   |        |  |      
|Operating expenses                                       |  |     | (14,882 | )                    |  |         | (2,401 | )      |  |        | (462  | )                                |  |               | (1,033  | )      |  |      
|Taxes other than income tax                              |  |     | (6,297  | )                    |  |         | —      |        |  |        | (159  | )                                |  |               | (406    | )      |  |      
|Exploration expense                                      |  |     | (3,737  | )                    |  |         | (11    | )      |  |        | (7    | )                                |  |               | (83     | )      |  |      
|Accretion expense                                        |  |     | (1,525  | )                    |  |         | —      |        |  |        | —     |                                  |  |               | (164    | )      |  |      
|Depreciation, depletion and amortisation, and impairment |  |     | (33,737 | )                    |  |         | (1,363 | )      |  |        | (142  | )                                |  |               | (17,863 | )      |  |      
|Special oil gain levy                                    |  |     | (55     | )                    |  |         | —      |        |  |        | —     |                                  |  |               | —       |        |  |      
|                                                         |  |     |         |                      |  |         |        |        |  |        |       |                                  |  |               |         |        |  |      
|                                                         |  |     | 47,654  |                      |  |         | 5,310  |        |  |        | 513   |                                  |  |               | (9,827  | )      |  |      
|                                                         |  |     |         |                      |  |         |        |        |  |        |       |                                  |  |               |         |        |  |      
|Income tax expense                                       |  |     | (11,913 | )                    |  |         | (536   | )      |  |        | (154  | )                                |  |               | 341     |        |  |      
|                                                         |  |     |         |                      |  |         |        |        |  |        |       |                                  |  |               |         |        |  |      
|Result of operations                                     |  |     | 35,741  |                      |  |         | 4,774  |        |  |        | 359   |                                  |  |               | (9,486  | )      |  |      













F-86





|CNOOC
LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND
GAS PRODUCING ACTIVITIES

(UNAUDITED)

(All amounts expressed in millions of
Renminbi unless otherwise stated)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------











2017

Enterprise’s share of
equity method investees:











|                                                             |  | PRC |        | Asia (excluding PRC) |  | Oceania |       | Africa |  | Canada |     | North America (excluding Canada) |  | South America |        | Europe |  | Total
|------------------------------------------------------------ |  | --- | ------ | -------------------- |  | ------- | ----- | ------ |  | ------ | --- | -------------------------------- |  | ------------- | ------ | ------ |  | -----
|Net sales to customers                                       |  |     | 193    |                      |  |         | —     |        |  |        | —   |                                  |  |               | —      |        |  |      
|Operating
    expenses                                       |  |     | (113   | )                    |  |         | —     |        |  |        | —   |                                  |  |               | —      |        |  |      
|Taxes
    other than income tax                              |  |     | (11    | )                    |  |         | —     |        |  |        | —   |                                  |  |               | —      |        |  |      
|Exploration
    expense                                      |  |     | —      |                      |  |         | —     |        |  |        | —   |                                  |  |               | —      |        |  |      
|Accretion
    expense                                        |  |     | (8     | )                    |  |         | —     |        |  |        | —   |                                  |  |               | —      |        |  |      
|Depreciation,
    depletion and amortisation, and impairment |  |     | (132   | )                    |  |         | —     |        |  |        | —   |                                  |  |               | —      |        |  |      
|Special
    oil gain levy                                    |  |     | —      |                      |  |         | —     |        |  |        | —   |                                  |  |               | —      |        |  |      
|                                                             |  |     |        |                      |  |         |       |        |  |        |     |                                  |  |               |        |        |  |      
|                                                             |  |     | (71    | )                    |  |         | —     |        |  |        | —   |                                  |  |               | —      |        |  |      
|                                                             |  |     |        |                      |  |         |       |        |  |        |     |                                  |  |               |        |        |  |      
|Income
    tax expense                                       |  |     | 11     |                      |  |         | —     |        |  |        | —   |                                  |  |               | —      |        |  |      
|                                                             |  |     |        |                      |  |         |       |        |  |        |     |                                  |  |               |        |        |  |      
|Result
    of operations                                     |  |     | (60    | )                    |  |         | —     |        |  |        | —   |                                  |  |               | —      |        |  |      
|                                                             |  |     |        |                      |  |         |       |        |  |        |     |                                  |  |               |        |        |  |      
|Total
    result of operations for producing activities      |  |     | 35,681 |                      |  |         | 4,774 |        |  |        | 359 |                                  |  |               | (9,486 | )      |  |      











| | (c) | Capitalised costs
| | --- | -----------------



2015

Consolidated entities







|                                                     |  | PRC |          | Asia (excluding PRC) |  | Oceania |         | Africa |  | Canada |        | North America (excluding Canada) |  | South America |         | Europe |  | Total
|---------------------------------------------------- |  | --- | -------- | -------------------- |  | ------- | ------- | ------ |  | ------ | ------ | -------------------------------- |  | ------------- | ------- | ------ |  | -----
|Proved oil and gas properties                        |  |     | 409,295  |                      |  |         | 30,736  |        |  |        | 2,420  |                                  |  |               | 65,593  |        |  |      
|Unproved oil and gas properties                      |  |     | 13,006   |                      |  |         | 1,616   |        |  |        | 2      |                                  |  |               | 27,644  |        |  |      
|                                                     |  |     |          |                      |  |         |         |        |  |        |        |                                  |  |               |         |        |  |      
|Accumulated depreciation, depletion and amortisation |  |     | (230,943 | )                    |  |         | (17,768 | )      |  |        | (1,253 | )                                |  |               | (43,408 | )      |  |      
|                                                     |  |     |          |                      |  |         |         |        |  |        |        |                                  |  |               |         |        |  |      
|Net capitalised costs                                |  |     | 191,358  |                      |  |         | 14,584  |        |  |        | 1,169  |                                  |  |               | 49,829  |        |  |      













F-87







|CNOOC
LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND
GAS PRODUCING ACTIVITIES

(UNAUDITED)

(All amounts expressed in millions of
Renminbi unless otherwise stated)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------





2015

Enterprise’s share of
equity method investees











|                                                     |  | PRC |        | Asia (excluding PRC) |  | Oceania |   | Africa |  | Canada |   | North America (excluding Canada) |  | South America |   | Europe |  | Total
|---------------------------------------------------- |  | --- | ------ | -------------------- |  | ------- | - | ------ |  | ------ | - | -------------------------------- |  | ------------- | - | ------ |  | -----
|Proved oil and gas properties                        |  |     | 2,129  |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      
|Unproved oil and gas properties                      |  |     | —      |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      
|Accumulated depreciation, depletion and amortisation |  |     | (1,831 | )                    |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      
|                                                     |  |     |        |                      |  |         |   |        |  |        |   |                                  |  |               |   |        |  |      
|Net capitalised costs                                |  |     | 298    |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      









2016

Consolidated entities





|                                                     |  | PRC |          | Asia (excluding PRC) |  | Oceania |         | Africa |  | Canada |        | North America (excluding Canada) |  | South America |         | Europe |  | Total
|---------------------------------------------------- |  | --- | -------- | -------------------- |  | ------- | ------- | ------ |  | ------ | ------ | -------------------------------- |  | ------------- | ------- | ------ |  | -----
|Proved oil and gas properties                        |  |     | 425,290  |                      |  |         | 36,318  |        |  |        | 2,585  |                                  |  |               | 84,014  |        |  |      
|Unproved oil and gas properties                      |  |     | 13,635   |                      |  |         | 1,731   |        |  |        | 2      |                                  |  |               | 28,404  |        |  |      
|Accumulated depreciation, depletion and amortisation |  |     | (266,002 | )                    |  |         | (23,081 | )      |  |        | (1,472 | )                                |  |               | (58,331 | )      |  |      
|                                                     |  |     |          |                      |  |         |         |        |  |        |        |                                  |  |               |         |        |  |      
|Net capitalised costs                                |  |     | 172,923  |                      |  |         | 14,968  |        |  |        | 1,115  |                                  |  |               | 54,087  |        |  |      









2016

Enterprise’s share of
equity method investees







|                                                     |  | PRC |        | Asia (excluding PRC) |  | Oceania |   | Africa |  | Canada |   | North America (excluding Canada) |  | South America |   | Europe |  | Total
|---------------------------------------------------- |  | --- | ------ | -------------------- |  | ------- | - | ------ |  | ------ | - | -------------------------------- |  | ------------- | - | ------ |  | -----
|Proved oil and gas properties                        |  |     | 2,129  |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      
|Unproved oil and gas properties                      |  |     | —      |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      
|Accumulated depreciation, depletion and amortisation |  |     | (1,971 | )                    |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      
|                                                     |  |     |        |                      |  |         |   |        |  |        |   |                                  |  |               |   |        |  |      
|Net capitalised costs                                |  |     | 158    |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      





F-88







|CNOOC
LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND
GAS PRODUCING ACTIVITIES

(UNAUDITED)

(All amounts expressed in millions of
Renminbi unless otherwise stated)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------





2017

Consolidated entities













|                                                     |  | PRC |          | Asia (excluding PRC) |  | Oceania |         | Africa |  | Canada |        | North America (excluding Canada) |  | South America |         | Europe |  | Total
|---------------------------------------------------- |  | --- | -------- | -------------------- |  | ------- | ------- | ------ |  | ------ | ------ | -------------------------------- |  | ------------- | ------- | ------ |  | -----
|Proved oil and gas properties                        |  |     | 443,193  |                      |  |         | 38,541  |        |  |        | 2,435  |                                  |  |               | 84,241  |        |  |      
|Unproved oil and gas properties                      |  |     | 16,163   |                      |  |         | 1,195   |        |  |        | 2      |                                  |  |               | 30,690  |        |  |      
|Accumulated depreciation, depletion and amortisation |  |     | (299,171 | )                    |  |         | (26,786 | )      |  |        | (1,480 | )                                |  |               | (64,047 | )      |  |      
|                                                     |  |     |          |                      |  |         |         |        |  |        |        |                                  |  |               |         |        |  |      
|Net capitalised costs                                |  |     | 160,185  |                      |  |         | 12,950  |        |  |        | 957    |                                  |  |               | 50,884  |        |  |      









2017

Enterprise’s share of
equity method investees







|                                                     |  | PRC |        | Asia (excluding PRC) |  | Oceania |   | Africa |  | Canada |   | North America (excluding Canada) |  | South America |   | Europe |  | Total
|---------------------------------------------------- |  | --- | ------ | -------------------- |  | ------- | - | ------ |  | ------ | - | -------------------------------- |  | ------------- | - | ------ |  | -----
|Proved oil and gas properties                        |  |     | 2,159  |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      
|Unproved oil and gas properties                      |  |     | —      |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      
|Accumulated depreciation, depletion and amortisation |  |     | (2,138 | )                    |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      
|                                                     |  |     |        |                      |  |         |   |        |  |        |   |                                  |  |               |   |        |  |      
|Net capitalised costs                                |  |     | 21     |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      









| | (d) | Costs incurred in oil and gas property acquisition, exploration and development
| | --- | -------------------------------------------------------------------------------







2015

Consolidated entities







|                     |  | PRC |        | Asia (excluding PRC) |  | Oceania |       | Africa |  | Canada |    | North America (excluding Canada) |  | South America |        | Europe |  | Total
|-------------------- |  | --- | ------ | -------------------- |  | ------- | ----- | ------ |  | ------ | -- | -------------------------------- |  | ------------- | ------ | ------ |  | -----
|Acquisition costs:   |  |     |        |                      |  |         |       |        |  |        |    |                                  |  |               |        |        |  |      
|– Proved             |  |     | —      |                      |  |         | —     |        |  |        | —  |                                  |  |               | —      |        |  |      
|– Unproved           |  |     | —      |                      |  |         | —     |        |  |        | —  |                                  |  |               | —      |        |  |      
|Exploration costs    |  |     | 9,516  |                      |  |         | 908   |        |  |        | 54 |                                  |  |               | 1,169  |        |  |      
|Development costs*   |  |     | 22,726 |                      |  |         | 4,582 |        |  |        | —  |                                  |  |               | 9,469  |        |  |      
|                     |  |     |        |                      |  |         |       |        |  |        |    |                                  |  |               |        |        |  |      
|Total costs incurred |  |     | 32,242 |                      |  |         | 5,490 |        |  |        | 54 |                                  |  |               | 10,638 |        |  |      











F-89





|CNOOC
LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND
GAS PRODUCING ACTIVITIES

(UNAUDITED)

(All amounts expressed in millions of
Renminbi unless otherwise stated)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------





2015

Enterprise’s share of
equity method investees











|                     |  | PRC |     | Asia (excluding PRC) |  | Oceania |   | Africa |  | Canada |   | North America (excluding Canada) |  | South America |   | Europe |  | Total
|-------------------- |  | --- | --- | -------------------- |  | ------- | - | ------ |  | ------ | - | -------------------------------- |  | ------------- | - | ------ |  | -----
|Acquisition costs:   |  |     |     |                      |  |         |   |        |  |        |   |                                  |  |               |   |        |  |      
|– Proved             |  |     | —   |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      
|– Unproved           |  |     | —   |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      
|Exploration costs    |  |     | 59  |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      
|Development costs*   |  |     | 241 |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      
|                     |  |     |     |                      |  |         |   |        |  |        |   |                                  |  |               |   |        |  |      
|Total costs incurred |  |     | 300 |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      











2016

Consolidated entities







|                     |  | PRC |        | Asia (excluding PRC) |  | Oceania |       | Africa |  | Canada |    | North America (excluding Canada) |  | South America |        | Europe |  | Total
|-------------------- |  | --- | ------ | -------------------- |  | ------- | ----- | ------ |  | ------ | -- | -------------------------------- |  | ------------- | ------ | ------ |  | -----
|Acquisition costs:   |  |     |        |                      |  |         |       |        |  |        |    |                                  |  |               |        |        |  |      
|– Proved             |  |     | —      |                      |  |         | —     |        |  |        | —  |                                  |  |               | —      |        |  |      
|– Unproved           |  |     | —      |                      |  |         | —     |        |  |        | —  |                                  |  |               | —      |        |  |      
|Exploration costs    |  |     | 6,243  |                      |  |         | 8     |        |  |        | 37 |                                  |  |               | 225    |        |  |      
|Development costs*   |  |     | 14,420 |                      |  |         | 3,549 |        |  |        | —  |                                  |  |               | 12,701 |        |  |      
|                     |  |     |        |                      |  |         |       |        |  |        |    |                                  |  |               |        |        |  |      
|Total costs incurred |  |     | 20,663 |                      |  |         | 3,557 |        |  |        | 37 |                                  |  |               | 12,926 |        |  |      







F-90





|CNOOC
LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND
GAS PRODUCING ACTIVITIES

(UNAUDITED)

(All amounts expressed in millions of
Renminbi unless otherwise stated)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------





2016

Enterprise’s share of
equity method investees











|                     |  | PRC |    | Asia (excluding PRC) |  | Oceania |   | Africa |  | Canada |   | North America (excluding Canada) |  | South America |   | Europe |  | Total
|-------------------- |  | --- | -- | -------------------- |  | ------- | - | ------ |  | ------ | - | -------------------------------- |  | ------------- | - | ------ |  | -----
|Acquisition costs:   |  |     |    |                      |  |         |   |        |  |        |   |                                  |  |               |   |        |  |      
|– Proved             |  |     | —  |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      
|– Unproved           |  |     | —  |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      
|Exploration costs    |  |     | 10 |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      
|Development costs*   |  |     | —  |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      
|                     |  |     |    |                      |  |         |   |        |  |        |   |                                  |  |               |   |        |  |      
|Total costs incurred |  |     | 10 |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      









2017

Consolidated entities







|                     |  | PRC |        | Asia (excluding PRC) |  | Oceania |       | Africa |  | Canada |   | North America (excluding Canada) |  | South America |       | Europe |  | Total
|-------------------- |  | --- | ------ | -------------------- |  | ------- | ----- | ------ |  | ------ | - | -------------------------------- |  | ------------- | ----- | ------ |  | -----
|Acquisition costs:   |  |     |        |                      |  |         |       |        |  |        |   |                                  |  |               |       |        |  |      
|– Proved             |  |     | —      |                      |  |         | —     |        |  |        | — |                                  |  |               | —     |        |  |      
|– Unproved           |  |     | —      |                      |  |         | —     |        |  |        | — |                                  |  |               | —     |        |  |      
|Exploration costs    |  |     | 7,933  |                      |  |         | 46    |        |  |        | 7 |                                  |  |               | 329   |        |  |      
|Development costs*   |  |     | 16,360 |                      |  |         | 4,001 |        |  |        | — |                                  |  |               | 9,180 |        |  |      
|                     |  |     |        |                      |  |         |       |        |  |        |   |                                  |  |               |       |        |  |      
|Total costs incurred |  |     | 24,293 |                      |  |         | 4,047 |        |  |        | 7 |                                  |  |               | 9,509 |        |  |      











2017

Enterprise’s share of
equity method investees









|                     |  | PRC |   | Asia (excluding PRC) |  | Oceania |   | Africa |  | Canada |   | North America (excluding Canada) |  | South America |   | Europe |  | Total
|-------------------- |  | --- | - | -------------------- |  | ------- | - | ------ |  | ------ | - | -------------------------------- |  | ------------- | - | ------ |  | -----
|Acquisition costs:   |  |     |   |                      |  |         |   |        |  |        |   |                                  |  |               |   |        |  |      
|– Proved             |  |     | — |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      
|– Unproved           |  |     | — |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      
|Exploration costs    |  |     | — |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      
|Development costs*   |  |     | 2 |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      
|                     |  |     |   |                      |  |         |   |        |  |        |   |                                  |  |               |   |        |  |      
|Total costs incurred |  |     | 2 |                      |  |         | — |        |  |        | — |                                  |  |               | — |        |  |      









| | * | The development costs include estimated future dismantlement costs of dismantling offshore oil
and gas properties.
| | - | ------------------------------------------------------------------------------------------------------------------



| | (e) | Standardised measure of discounted future net cash flows and changes therein
| | --- | ----------------------------------------------------------------------------



Pursuant to FASB Topic 932,
the average of first-day-of-the-month oil price during the 12-month period before the year end, were used to estimate annual future
production from proved reserves to determine future cash inflows.





F-91







|CNOOC
LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND
GAS PRODUCING ACTIVITIES

(UNAUDITED)

(All amounts expressed in millions of
Renminbi unless otherwise stated)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------







Future development costs are
estimated based upon constant price assumptions and the assumption of the continuation of existing economic, operating and regulatory
conditions. Future income taxes are calculated by applying the year-end statutory rate to estimate future pre-tax cash flows after
provision for the tax cost of the oil and natural gas properties based upon existing laws and regulations. The discount was computed
by the application of a 10% discount factor to the estimated future net cash flows.



Management believes that this
information does not represent the fair market value of the oil and natural gas reserves or the present value of estimated cash
flows since no economic value is attributed to potential reserves, the use of a 10% discount rate is arbitrary, and prices change
constantly.



Present value of estimated future
net cash flows:





2015

Consolidated entities













|                                                             |  | Notes |  | PRC |          | Asia (excluding PRC) |  | Oceania |         | Africa |  | Canada |        | North America (excluding Canada) |  | South America |         | Europe |  | Total
|------------------------------------------------------------ |  | ----- |  | --- | -------- | -------------------- |  | ------- | ------- | ------ |  | ------ | ------ | -------------------------------- |  | ------------- | ------- | ------ |  | -----
|Future cash inflows                                          |  | (1)   |  |     | 791,748  |                      |  |         | 59,432  |        |  |        | 12,649 |                                  |  |               | 49,238  |        |  |      
|Future production
    costs                                  |  |       |  |     | (268,950 | )                    |  |         | (28,572 | )      |  |        | (3,332 | )                                |  |               | (17,100 | )      |  |      
|Future development
    costs                                 |  | (2)   |  |     | (184,967 | )                    |  |         | (12,962 | )      |  |        | (2,442 | )                                |  |               | (26,992 | )      |  |      
|Future
    income taxes                                      |  |       |  |     | (46,043  | )                    |  |         | (4,769  | )      |  |        | (1,733 | )                                |  |               | —       |        |  |      
|                                                             |  |       |  |     |          |                      |  |         |         |        |  |        |        |                                  |  |               |         |        |  |      
|Future net cash flows                                        |  | (3)   |  |     | 291,788  |                      |  |         | 13,129  |        |  |        | 5,142  |                                  |  |               | 5,146   |        |  |      
|10%
    discount factor                                      |  |       |  |     | (127,971 | )                    |  |         | (5,392  | )      |  |        | (1,664 | )                                |  |               | (5,868  | )      |  |      
|                                                             |  |       |  |     |          |                      |  |         |         |        |  |        |        |                                  |  |               |         |        |  |      
|Standardised
    measure of discounted future net cash flows |  |       |  |     | 163,817  |                      |  |         | 7,737   |        |  |        | 3,478  |                                  |  |               | (722    | )      |  |      









2015

Enterprise’s share of
equity method investees







|                                                                  |  | Notes |  | PRC |         | Asia (excluding PRC) |  | Oceania |       | Africa |  | Canada |       | North America (excluding Canada) |  | South America |      | Europe |  | Total
|----------------------------------------------------------------- |  | ----- |  | --- | ------- | -------------------- |  | ------- | ----- | ------ |  | ------ | ----- | -------------------------------- |  | ------------- | ---- | ------ |  | -----
|Future cash inflows                                               |  | (1)   |  |     | 579     |                      |  |         | —     |        |  |        | —     |                                  |  |               | —    |        |  |      
|Future production
    costs                                       |  |       |  |     | (928    | )                    |  |         | —     |        |  |        | —     |                                  |  |               | —    |        |  |      
|Future development
    costs                                      |  | (2)   |  |     | (575    | )                    |  |         | —     |        |  |        | —     |                                  |  |               | —    |        |  |      
|Future
    income taxes                                           |  |       |  |     | —       |                      |  |         | —     |        |  |        | —     |                                  |  |               | —    |        |  |      
|                                                                  |  |       |  |     |         |                      |  |         |       |        |  |        |       |                                  |  |               |      |        |  |      
|Future net cash flows                                             |  | (3)   |  |     | (924    | )                    |  |         | —     |        |  |        | —     |                                  |  |               | —    |        |  |      
|10% discount factor                                               |  |       |  |     | 213     |                      |  |         | —     |        |  |        | —     |                                  |  |               | —    |        |  |      
|                                                                  |  |       |  |     |         |                      |  |         |       |        |  |        |       |                                  |  |               |      |        |  |      
|Standardised
    measure of discounted future net cash flows      |  |       |  |     | (711    | )                    |  |         | —     |        |  |        | —     |                                  |  |               | —    |        |  |      
|                                                                  |  |       |  |     |         |                      |  |         |       |        |  |        |       |                                  |  |               |      |        |  |      
|Total
    standardised measure of discounted future net cash flow |  |       |  |     | 163,106 |                      |  |         | 7,737 |        |  |        | 3,478 |                                  |  |               | (722 | )      |  |      









F-92









|CNOOC
LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND
GAS PRODUCING ACTIVITIES

(UNAUDITED)

(All amounts expressed in millions of
Renminbi unless otherwise stated)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------





2016

Consolidated entities







|                                                             |  | Notes |  | PRC |          | Asia (excluding PRC) |  | Oceania |         | Africa |  | Canada |        | North America (excluding Canada) |  | South America |         | Europe |  | Total
|------------------------------------------------------------ |  | ----- |  | --- | -------- | -------------------- |  | ------- | ------- | ------ |  | ------ | ------ | -------------------------------- |  | ------------- | ------- | ------ |  | -----
|Future cash inflows                                          |  | (1)   |  |     | 858,295  |                      |  |         | 63,639  |        |  |        | 10,553 |                                  |  |               | 34,626  |        |  |      
|Future production
    costs                                  |  |       |  |     | (315,248 | )                    |  |         | (35,825 | )      |  |        | (2,757 | )                                |  |               | (9,273  | )      |  |      
|Future development
    costs                                 |  | (2)   |  |     | (160,725 | )                    |  |         | (8,222  | )      |  |        | (2,175 | )                                |  |               | (17,687 | )      |  |      
|Future
    income taxes                                      |  |       |  |     | (60,468  | )                    |  |         | (4,611  | )      |  |        | (1,371 | )                                |  |               | —       |        |  |      
|                                                             |  |       |  |     |          |                      |  |         |         |        |  |        |        |                                  |  |               |         |        |  |      
|Future net cash flows                                        |  | (3)   |  |     | 321,854  |                      |  |         | 14,981  |        |  |        | 4,250  |                                  |  |               | 7,666   |        |  |      
|10%
    discount factor                                      |  |       |  |     | (139,345 | )                    |  |         | (5,753  | )      |  |        | (1,165 | )                                |  |               | (3,718  | )      |  |      
|                                                             |  |       |  |     |          |                      |  |         |         |        |  |        |        |                                  |  |               |         |        |  |      
|Standardised
    measure of discounted future net cash flows |  |       |  |     | 182,509  |                      |  |         | 9,228   |        |  |        | 3,085  |                                  |  |               | 3,948   |        |  |      









2016

Enterprise’s share of
equity method investees









|                                                                  |  | Notes |  | PRC |         | Asia (excluding PRC) |  | Oceania |       | Africa |  | Canada |       | North America (excluding Canada) |  | South America |       | Europe |  | Total
|----------------------------------------------------------------- |  | ----- |  | --- | ------- | -------------------- |  | ------- | ----- | ------ |  | ------ | ----- | -------------------------------- |  | ------------- | ----- | ------ |  | -----
|Future cash inflows                                               |  | (1)   |  |     | 1,801   |                      |  |         | —     |        |  |        | —     |                                  |  |               | —     |        |  |      
|Future production costs                                           |  |       |  |     | (1,074  | )                    |  |         | —     |        |  |        | —     |                                  |  |               | —     |        |  |      
|Future development costs                                          |  | (2)   |  |     | (547    | )                    |  |         | —     |        |  |        | —     |                                  |  |               | —     |        |  |      
|Future income taxes                                               |  |       |  |     | —       |                      |  |         | —     |        |  |        | —     |                                  |  |               | —     |        |  |      
|                                                                  |  |       |  |     |         |                      |  |         |       |        |  |        |       |                                  |  |               |       |        |  |      
|Future net cash flows                                             |  | (3)   |  |     | 180     |                      |  |         | —     |        |  |        | —     |                                  |  |               | —     |        |  |      
|10% discount factor                                               |  |       |  |     | 114     |                      |  |         | —     |        |  |        | —     |                                  |  |               | —     |        |  |      
|                                                                  |  |       |  |     |         |                      |  |         |       |        |  |        |       |                                  |  |               |       |        |  |      
|Standardised measure of discounted
    future net cash flows      |  |       |  |     | 294     |                      |  |         | —     |        |  |        | —     |                                  |  |               | —     |        |  |      
|                                                                  |  |       |  |     |         |                      |  |         |       |        |  |        |       |                                  |  |               |       |        |  |      
|Total standardised
    measure of discounted future net cash flow |  |       |  |     | 182,803 |                      |  |         | 9,228 |        |  |        | 3,085 |                                  |  |               | 3,948 |        |  |      



























F-93





|CNOOC
LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND
GAS PRODUCING ACTIVITIES

(UNAUDITED)

(All amounts expressed in millions of
Renminbi unless otherwise stated)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------





2017

Consolidated entities





|                                                             |  | Notes |  | PRC |          | Asia (excluding PRC) |  | Oceania |         | Africa |  | Canada |        | North America (excluding Canada) |  | South America |        | Europe |  | Total
|------------------------------------------------------------ |  | ----- |  | --- | -------- | -------------------- |  | ------- | ------- | ------ |  | ------ | ------ | -------------------------------- |  | ------------- | ------ | ------ |  | -----
|Future cash inflows                                          |  | (1)   |  |     | 856,256  |                      |  |         | 50,074  |        |  |        | 10,163 |                                  |  |               | 24,917 |        |  |      
|Future production
    costs                                  |  |       |  |     | (316,050 | )                    |  |         | (22,714 | )      |  |        | (2,589 | )                                |  |               | (1,394 | )      |  |      
|Future development
    costs                                 |  | (2)   |  |     | (157,966 | )                    |  |         | (4,134  | )      |  |        | (1,825 | )                                |  |               | (1,593 | )      |  |      
|Future
    income taxes                                      |  |       |  |     | (64,232  | )                    |  |         | (6,535  | )      |  |        | (1,450 | )                                |  |               | —      |        |  |      
|                                                             |  |       |  |     |          |                      |  |         |         |        |  |        |        |                                  |  |               |        |        |  |      
|Future net cash flows                                        |  | (3)   |  |     | 318,008  |                      |  |         | 16,691  |        |  |        | 4,299  |                                  |  |               | 21,930 |        |  |      
|10%
    discount factor                                      |  |       |  |     | (142,001 | )                    |  |         | (6,014  | )      |  |        | (1,090 | )                                |  |               | (4,860 | )      |  |      
|                                                             |  |       |  |     |          |                      |  |         |         |        |  |        |        |                                  |  |               |        |        |  |      
|Standardised
    measure of discounted future net cash flows |  |       |  |     | 176,007  |                      |  |         | 10,677  |        |  |        | 3,209  |                                  |  |               | 17,070 |        |  |      











2017

Enterprise’s share of
equity method investees





|                                                                  |  | Notes |  | PRC |         | Asia (excluding PRC) |  | Oceania |        | Africa |  | Canada |       | North America (excluding Canada) |  | South America |        | Europe |  | Total
|----------------------------------------------------------------- |  | ----- |  | --- | ------- | -------------------- |  | ------- | ------ | ------ |  | ------ | ----- | -------------------------------- |  | ------------- | ------ | ------ |  | -----
|Future cash inflows                                               |  | (1)   |  |     | 1,581   |                      |  |         | —      |        |  |        | —     |                                  |  |               | —      |        |  |      
|Future production costs                                           |  |       |  |     | (985    | )                    |  |         | —      |        |  |        | —     |                                  |  |               | —      |        |  |      
|Future development
    costs                                      |  | (2)   |  |     | —       |                      |  |         | —      |        |  |        | —     |                                  |  |               | —      |        |  |      
|Future income taxes                                               |  |       |  |     | —       |                      |  |         | —      |        |  |        | —     |                                  |  |               | —      |        |  |      
|                                                                  |  |       |  |     |         |                      |  |         |        |        |  |        |       |                                  |  |               |        |        |  |      
|Future net cash flows                                             |  | (3)   |  |     | 596     |                      |  |         | —      |        |  |        | —     |                                  |  |               | —      |        |  |      
|10%
    discount factor                                           |  |       |  |     | (364    | )                    |  |         | —      |        |  |        | —     |                                  |  |               | —      |        |  |      
|                                                                  |  |       |  |     |         |                      |  |         |        |        |  |        |       |                                  |  |               |        |        |  |      
|Standardised
    measure of discounted future net cash flows      |  |       |  |     | 232     |                      |  |         | —      |        |  |        | —     |                                  |  |               | —      |        |  |      
|                                                                  |  |       |  |     |         |                      |  |         |        |        |  |        |       |                                  |  |               |        |        |  |      
|Total
    standardised measure of discounted future net cash flow |  |       |  |     | 176,239 |                      |  |         | 10,677 |        |  |        | 3,209 |                                  |  |               | 17,070 |        |  |      















F-94









|CNOOC
LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND
GAS PRODUCING ACTIVITIES

(UNAUDITED)

(All amounts expressed in millions of
Renminbi unless otherwise stated)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------





| | (1) | Future cash flows consist of the Group’s 100% interest in the independent oil and gas properties
and the Group’s participating interest in the properties under production sharing contracts in the PRC less (i) an adjustment
for the royalties payable to the PRC government and share oil payable to the PRC government under production sharing contracts
and (ii) an adjustment for production allocable to foreign partners under the PRC production sharing contracts for exploration
costs attributable to the Group’s participating interest, and plus the participating interest in the properties covered under
the production sharing contracts in oversea countries, less adjustments, if any, of share oil attributable to the host government
and the domestic market obligation.
| | --- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------



| | (2) | Future development costs include the estimated costs of drilling future development wells and building
the production platforms.
| | --- | --------------------------------------------------------------------------------------------------------------------------------



| | (3) | Future net cash flows have been prepared taking into consideration estimated future dismantlement
costs of dismantling offshore oil and gas properties.
| | --- | -------------------------------------------------------------------------------------------------------------------------------------------------------



Changes in the standardised
measure of discounted future net cash flows:







|                                                                          |  | 2015              
|------------------------------------------------------------------------- |  | ------------------
|                                                                          |  | Consolidated Total
|                                                                          |  |                   
|Standardised measure, beginning of year                                   |  |                   
|Sales of production, net of royalties and production costs                |  |                   
|Net change in prices, net of royalties and production costs               |  |                   
|Extensions discoveries and improved recovery, net of related future costs |  |                   
|Change in estimated future development costs                              |  |                   
|Development costs incurred during the year                                |  |                   
|Revisions in quantity estimates                                           |  |                   
|Accretion of discount                                                     |  |                   
|Net change in income taxes                                                |  |                   
|Purchase/(disposal) of properties                                         |  |                   
|Changes in timing and other                                               |  |                   
|                                                                          |  |                   
|Standardised measure, end of year                                         |  |                   









|                                                                          |  | 2016              
|------------------------------------------------------------------------- |  | ------------------
|                                                                          |  | Consolidated Total
|Standardised measure, beginning of year                                   |  |                   
|Sales of production, net of royalties and production costs                |  |                   
|Net change in prices, net of royalties and production costs               |  |                   
|Extensions discoveries and improved recovery, net of related future costs |  |                   
|Change in estimated future development costs                              |  |                   
|Development costs incurred during the year                                |  |                   
|Revisions in quantity estimates                                           |  |                   
|Accretion of discount                                                     |  |                   
|Net change in income taxes                                                |  |                   
|Purchase/(disposal) of properties                                         |  |                   
|Changes in timing and other                                               |  |                   
|                                                                          |  |                   
|Standardised measure, end of year                                         |  |                   







F-95





|CNOOC
LIMITED

SUPPLEMENTARY INFORMATION ON OIL AND
GAS PRODUCING ACTIVITIES

(UNAUDITED)

(All amounts expressed in millions of
Renminbi unless otherwise stated)
|------------------------------------------------------------------------------------------------------------------------------------------------------------------





|                                                                          |  | 2017              
|------------------------------------------------------------------------- |  | ------------------
|                                                                          |  | Consolidated Total
|Standardised measure, beginning of year                                   |  |                   
|Sales of production, net of royalties and production costs                |  |                   
|Net change in prices, net of royalties and production costs               |  |                   
|Extensions discoveries and improved recovery, net of related future costs |  |                   
|Change in estimated future development costs                              |  |                   
|Development costs incurred during the year                                |  |                   
|Revisions in quantity estimates                                           |  |                   
|Accretion of discount                                                     |  |                   
|Net change in income taxes                                                |  |                   
|Purchase/(disposal) of properties                                         |  |                   
|Changes in timing and other                                               |  |                   
|                                                                          |  |                   
|Standardised measure, end of year                                         |  |                   









F-96