Shell, CNOOC sign exploration contract

May 5, 2000

Shell Exploration China Ltd. (SECL) has signed a contract with China National Offshore Oil Corp. (CNOOC) to explore for oil in the South China Sea. The 1,895 sq km block lies about 80 km southeast of Hong Kong in the Pearl River Mouth basin next to the Xijiang oil fields.

Shell International Ltd. subsidiary Shell Exploration China Ltd. (SECL) has signed a contract with China National Offshore Oil Corp. (CNOOC) to explore for oil in the South China Sea.

The 1,895 sq km block lies about 80 km southeast of Hong Kong in the Pearl River Mouth basin next to the Xijiang oil fields. Through a joint venture, CNOOC, SECL, and Phillips Petroleum Co.'s subsidiary Phillips China Inc. are producing more than 90,000 b/d of oil in the Xijiang fields.

Under the agreement, SECL has committed to drilling one exploration well on Block 15/12 during the initial 27-month exploration period. Three more exploration wells could be drilled over a 4-year period through two subsequent optional exploration periods.

The contract's award follows a 100 sq km, 3D seismic survey of the block conducted in May 1999 as part of a 9-month geophysical study agreement between CNOOC and SECL.