Green Dragon Gas Ltd. has entered into a cooperation agreement with China National Petroleum Corp. relating to the Chengzhuang block, a 67-sq-km area included within the Shizhuang South production-sharing contract (OGJ Online, Jan. 24, 2003).
The agreement, which ends on Mar. 21, 2033, calls for CNPC and China United Coalbed Methane Corp. Ltd. to transfer their rights and obligations under the PSC in Chengzhuang to Petrochina.
As a result, PetroChina will operate Chengzhuang with 53% interest and Green Dragon will hold the remaining 47%.
The parties have agreed that PetroChina will recover in full all unrecovered exploration costs, development costs, operating costs, and deemed interest from the effective date of the PSC before Green Dragon recovers unrecovered exploration costs and receives allocation under the PSC.
From the effective date of the Shizhuang South PSC to Dec. 31, 2013, PetroChina incurred total costs of 790 million yuan ($128.3 million), while the unrecovered balance of exploration and development costs on Chengzhuang for the same period stood at 173 million yuan ($28.1 million).
The companies say they will apply to the relevant ministry for approval to not prepare or submit an overall development plan for Chengzhuang.
They instead plan to formulate expenditure and work programs in accordance with operational progress, after having been approved by the joint management committee, which will now be convened regularly in respect of the Chengzhuang, and approved by CNPC.