China National Offshore Oil Corp., the nation's third-biggest oil explorer, said profit climbed 35 percent in the first six months as oil prices surged and crude production increased.

Net income rose to 18.95 billion yuan ($2.78 billion) and sales gained 48 percent to 106.3 billion yuan, the state oil producer said in a statement on its Web site. Oil and natural- gas production increased 2.4 percent to 20.7 million metric tons of oil equivalent.

Benchmark oil prices in New York have gained 73 percent in the past year and touched a record $147.27 a barrel on July 11. China National's listed unit, Cnooc Ltd., plans to increase capital spending by 44 percent this year to expand oil and gas output by as much as 18 percent and help meet energy demand in the world's fastest-growing major economy.

``The big jump in the sales of Cnooc's parent is attributed to the output gain amid soaring crude prices,'' Wang Aochao, an oil analyst with UOB-Kay Hian Ltd., said by telephone in Shanghai today. Cnooc's first-half profit and output gains were probably similar to the parent's, Wang said.

Cnooc shares rose 1 percent to HK$12 in Hong Kong at 11:36 a.m. local time.

``The market should feel comfortable with the net income gain of Cnooc in the first half,'' Wang said. ``We expect full- year profit to rise roughly 50 percent.''

China National's earnings include contributions from listed units such as China Oilfield Services Ltd. and fertilizer producer China BlueChemical Ltd.

Full-Year Output

In the first quarter, Cnooc's crude and gas production from fields including overseas areas rose 5 percent to the equivalent of 496,753 barrels of oil a day. Cnooc must step up exploration and output in the second half to achieve its target increase for 2008, Wang said.

Higher crude prices boosted raw-material costs for China National's downstream fertilizer and refining business, the group said in the statement. Cost of sales jumped 53 percent during the period from a year earlier, it said, without giving an exact figure.

The Beijing-based company paid 30.3 billion yuan of taxes to the central government during the period, up 73 percent from a year earlier, according to the statement dated July 18. China National's assets totaled 383.79 billion yuan at the end of June.