Conoco plans exploration campaign off Taiwan

Where Conoco Will Explore Off Taiwan [70,652 bytes] Conoco Inc. and Taiwan's state owned Chinese Petroleum Corp. (CPC) have agreed to jointly explore for oil and gas in three areas in the Taiwan Strait off Taiwan. The agreement was disclosed last week against a backdrop of increasing military tension between Taiwan and China. Ahead of Taiwan's upcoming presidential elections, Beijing has been conducting missile tests in the area. In response, the administration of President Clinton

March 25, 1996

2 min read

Where Conoco Will Explore Off Taiwan [70,652 bytes]

Conoco Inc. and Taiwan's state owned Chinese Petroleum Corp. (CPC) have agreed to jointly explore for oil and gas in three areas in the Taiwan Strait off Taiwan.

The agreement was disclosed last week against a backdrop of increasing military tension between Taiwan and China.

Ahead of Taiwan's upcoming presidential elections, Beijing has been conducting missile tests in the area. In response, the administration of President Clinton ordered U.S. warships to conduct naval exercises near Taiwan.

Agreement terms

Conoco will spend at least $65 million during the next 51/2 years to drill at least 13 wells off Taiwan.

Conoco will fund the entire cost of drilling the first four wells, with CPC contributing 25% of all drilling costs thereafter.

The two companies will share equally any oil production that results. In the event of a commercial gas development, CPC has agreed to purchase all gas produced.

Conoco will participate in a production sharing contract and take a 75% interest in the project. CPC has the option to boost its stake to 50%.

Drillsites are not disclosed.

The areas consist of all of Blocks II-A and II-C, the west half of II-D, and the southern part of Block II-F, all off northern Taiwan; all of Blocks I-B and I-C off Central Taiwan; and all of Blocks I-D, I-E, and I-H and the north half of Block I-F off southern Taiwan.

Conoco discovery

Conoco in 1971 found gas off the southern coastal city of Kaohsiung with a wildcat that flowed 35 MMcfd. However, it terminated its contract at the time and relinquished the acreage to CPC because it was looking for oil, not gas.

Since then, however, burgeoning Taiwanese demand for gas has renewed interest in exploring for gas in its territory. CPC last year found substantial gas reserves off Taiwan's southern coast and started an onshore exploration program in Central Taiwan (OGJ, Feb. 20, 1995, Newsletter).

Taiwan imports almost all of its fossil fuels and is one of the world's biggest consumers of imported liquefied natural gas.