By OGJ editors
HOUSTON, Aug. 21 -- CNOOC Ltd. reported Tuesday that its parent company, China National Offshore Oil Corp., along with China Petrochemical Corp. (Sinopec), Royal Dutch/Shell Group, and Unocal Corp. have finalized an agreement to explore, develop, and market natural gas, oil, and condensate in the East China Sea.
The agreement covers three exploration and two development contract areas covering 22,000 sq km in the Xihu Trough, which has 500-800 billion cu m of proven natural gas reserves, but has been largely underexplored. The Xihu Trough, about 450 km southeast of Shanghai, contains the Chunxiao, Tianwaitian, and Duangiao gas discoveries and Canxue oil and gas discovery (OGJ Apr. 1, 2002, p. 41).
The Chunxiao development area, expected to come on stream in mid-2005, will be developed first. CNOOC, which will be operator of all five areas, will build four platforms, and plans to drill 4-6 exploration wells at a cost of $200 million (OGJ Online, Dec. 27, 2001). Production will be transported to Zhejiang province via a subsea pipeline.
The international partners will assume full financial risk during the exploration stage, CNOOC said, adding that the proximity of the areas to growing energy market in East China makes it an attractive investment opportunity for the participants, whose combined strength enhances efforts to make the project a success.
CNOOC and Sinopec each have a 30% interesting the project, and Shell and Unocal each hold 20%.
