Husky Gives Go-Ahead to $6.5B Gas Project Offshore China

Husky has sanctioned the development of the Liwan 3-1 and Liuhua 34-2 fields, the principal fields of the Liwan Gas Project in the South China Sea.

Husky and China National Offshore Oil Corporation (CNOOC) are jointly developing the $6.5 billion project, which aims to bring to market at least three natural gas discoveries on Block 29/26, located approximately 300 kilometers southeast of Hong Kong. The Overall Development Plan (ODP) for Liwan 3-1 has been submitted to Chinese government authorities for regulatory approval and a gas sales agreement for production from the field is in place.

"The Liwan Gas Project will serve as a cornerstone in our plans to establish South East Asia as a major growth pillar for the Company," said Husky CEO Asim Ghosh. "This is a top-tier project that is expected to deliver strong value to our shareholders.

"In addition to the sanction of the Sunrise Energy Project, Liwan represents the second major action we have taken over the past year to lay the foundations for our three growth pillars in the Oil Sands, South East Asia and the Atlantic Region."

Husky recently announced that a gas sales agreement had been executed with CNOOC Gas & Power Group, Guangdong Branch for volumes from the Liwan 3-1 field. Production will supply the Guangdong Province natural gas grid from an onshore gas plant at Gaolan Island, Zhuahai.

The project is proceeding on schedule towards planned first gas delivery in 2013/2014. Production from the Liwan 3-1 and Liuhua 34-2 fields is expected to ramp up through 2014 towards a rate above 300 mmcf/day (gross). Once the Liuhua 29-1 field is approved and developed, the project is expected to reach gross production of approximately 500 mmcf/day in the 2015 timeframe. Husky has a 49 percent ownership interest in production from the block.

Targeting 50,000 boe/day in 2015

Husky has a rich portfolio of assets in South East Asia, reflecting a dynamic, growth-oriented energy play. Assets include the producing Wenchang oil fields in the Pearl River Mouth Basin offshore China and natural gas discoveries offshore Indonesia. Husky and its partners are also advancing plans to bring the Madura BD gas discovery offshore Indonesia to production in 2014.

The Company is targeting overall production from the region of approximately 50,000 barrels of oil equivalent per day in 2015.


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