Chinese State Council published a revised version of "Regulations of the People's Republic of China on the Exploitation of Offshore Petroleum Resources in Cooperation with Foreign Enterprises" on October 10, 2001 in the Council's official release 318. The revision was prompted by a comprehensive review of all business laws and regulations by the Chinese government to ensure their WTO compliance in the eve of formal WTO admission. The terms revised in the law governing offshore exploration included restrictive provisions on technology transfer and domestic components requirements in procurement. The removal of the restrictions provides a level playing ground for all oil field services contractors, domestic or international. It is expected to benefit CNOOC's E&P business and further increase PSC activities offshore China.
CNOOC will continue to enjoy the exclusive right to conduct PSC ("Production Sharing Contract") activities with foreign contractors, entitle to all rights and privileges under the original law. The regulation also states that CNOOC, as a state-own enterprise, is to be in charge of all efforts to exploit petroleum resources with contractors in Chinese water.
"This reaffirms a favorable regulatory environment for CNOOC's E&P business," commented by Mr. Wei Liucheng, Chairman and CEO of CNOOC Limited.
Dr. Mark Qiu, CFO of the Company remarked, "We informed the market earlier of the ongoing review of the law and expressed confidence that our special mandate will be upheld and revisions, if any, would be positive. This is a good confirmation."
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