CNOOC Ltd. has completed about 95% of development work and plans to start gas production from Lishui 36-1 gas field on Block 25/34 in the East China Sea offshore China, said partner and block operator Primeline Energy Holdings Inc., London.
CNOOC, as development operator, will commission the facility, tie it into to the provincial gas grid, and initiate trial production, Primeline said.
Primeline, in view of the development progress and relatively short time to first gas, has decided not to proceed with the previously announced convertible bonds issue at this time. In the meantime, the company has secured an additional interest free working capital loan from its chairman who has also agreed to convert part of his existing loan into shares.
An undrawn facility of $2,146,000 is intended to give Primeline time to work with CNOOC to finish development and secure all regulatory approvals for development and production in order to supply gas to the Zhejiang provincial grid. At that time the board believes the company will be in much better position to raise equity or bond finance to fund further exploration.
Primeline has a 75% contractor's interest in and is the operator of the petroleum contract with CNOOC for 5,877 sq km Block 33/07 in the East China Sea and a 36.75% interest in the LS36-1 gas field in Block 25/34. The companies updated the contract on Block 25/34 last year (OGJ Online, June 18, 2012).