China National Offshore Oil Corp. (CNOOC) signed two production sharing contracts (PSCs) with South Korean SK Holdings' affiliate SK Innovation Co., Ltd.for Blocks 04/20 and 17/03 in the South China Sea, the Chinese company's subsidiary CNOOC Ltd. reported Tuesday.
The two blocks, Block 04/20 and Block 17/03 in the Pearl River Mouth Basin, were made available in 2012 through CNOOC’s Open Blocks in Offshore China.
Block 04/20 covers a total area of approximately 1,984 square miles (5,138 square kilometers), with average water depth of 164 to 328 feet (50 to 100 meters), while Block 17/03 is spread over an area of around 2,968 square miles (7,686 square kilometers) in water depths of between 164 and 328 feet (50 and 100 meters).
Under the Production Sharing Contracts (PSCs), SK Innovation will be the operator of Blocks 04/20 and 17/03. The costs of exploration for the two blocks will be borne by CNOOC and SK in a proportion of 20 percent and 80 percent of participating interest, respectively. Both companies will conduct 2D seismic data surveys and drill exploration wells.
"Once entering the development phase, CNOOC has the right to participate in up to 60 percent of the working interest in any commercial discoveries in the blocks," CNOOC Ltd. said in a press release.
Earlier this month, China's main offshore oil and gas company flowed first oil at its 100-percent owned Jinzhou 9-3 comprehensive adjustment project in North Liaodong Bay in Bohai, bringing into production 7,600 barrels of crude oil per day, with peak production scheduled to reach approximately 12,000 barrels per day later this year.
CNOOC intends to bring six more new oil and gas developments located offshore China into production this year. These include the Kenli 10-1 and Bozhong 28/4 projects, which are planned to commence production in the first half of 2015, adding around 36,000 abd 30,000 barrels of oil equivalent per day, respectively.
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