CNOOC and Devon Sign Deepwater PSCs

CNOOC Limited said Tuesday that its parent company, China National Offshore Oil Corporation (CNOOC) has signed two production sharing contracts (PSC) with Devon Energy Corporation for deepwater blocks 64/18 and 53/30.

Block 64/18, located in Qiong Dong Nan Basin in the Western South China Sea, covers a total area of 7,712 square kilometers. The other block 53/30 covers approximately 6,313 square kilometers in the Pearl River Mouth Basin. Water depth of the two blocks ranges from 300 to 2000 meters.

Under the terms of the contracts, Devon is committed to conduct 2-D seismic survey and wildcat drilling during the 8-year exploration period in the two blocks.

All expenditures incurred during exploration period will be borne by Devon. CNOOC Ltd. has the right to participate in up to 51% interests in the event of any commercial discovery in the two blocks.

Zhu Weilin, Vice President of the Company and General Manager of exploration department commented, "With the breakthrough in Liwan 3-1, we are very confident in the resource potential of deepwater area offshore China. We hope Devon will continue its success story in pursing offshore China's opportunities."

In December 2005, CNOOC and Devon inked a PSC on deepwater block 42/05. Up to now, CNOOC has signed 10 deepwater contracts with foreign companies.

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