Under the terms of the PSCs, BG Group will be the operator and will retain a 100 per cent interest during the exploration phase. In the event of a commercial discovery CNOOC has an option to take an interest of up to 51 per cent in that field. Under the terms of the Geophysical Survey Agreement, upon completion of the mandated work program, BG has an exclusive option to enter into a Production Sharing Contract for Block 41/06. The agreements are subject to final government approval.
BG Group Chief Executive Frank Chapman said: "These largely unexplored blocks are well placed with respect to the robust and high growth gas markets of Southern China. The signing of these agreements represents BG's first investment in China and we look forward to working with CNOOC in evaluating these prospects."
The exploration work programs for the PSC blocks will be carried out in three phases. This will involve the acquisition of both 2D and 3D seismic and the drilling of one exploration well on each block in the first phase. The Geophysical Survey Agreement involves the acquisition and processing of 2D seismic.
The three blocks cover a total area of approximately 25,800 square kilometers and are located in the Qiongdongnan and Pearl River Mouth basins of the South China Sea. Water depth on the blocks ranges from 180 to 2100 meters.
Block 64/11 (7546 sq km) is located in water depths ranging from 180 to 1500 meters while Block 53/16 (8671 sq km) is located in water depths ranging from 200 to 2100 meters. Both the aforementioned blocks are located in the Qiongdongnan basin. Block 41/06 (9601 sq km) is located in water depths ranging from 300 to 2000 meters in the Pearl River Mouth basin. The blocks are approximately 200-300 kilometers offshore Guangdong Province and Hong Kong in the South China Sea.
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