Primeline Moving Forward with Lishui Gas Play Project


Lishui Gas Play
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Primeline Energy has commenced the site survey of the proposed exploration well locations in the Lishui Gas Play in Block 25/34, East China Sea.

The Company has entered into a services contract with China Oilfield Services for the site survey of two proposed well locations, which have been identified, from the recently completed 3D seismic program within Block 25/34. The site survey has now commenced, using vessel NH 503, a survey boat owned by COSL. COSL, a Hong Kong/Shanghai-listed company, is the leading oilfield services provider in the offshore China market. The site survey is planned to be completed over the next two weeks.

As announced in July 2007, Primeline and China National Offshore Oil Corp have agreed on the locations and ranking of the next exploration wells in Block 25/34. The well designs having now been completed, the site survey is an important part of the preparation work for the proposed drilling program. The Company plans to drill at least one well in the Lishui Gas Play and is currently in discussions with drilling contractors and CNOOC to secure a rig for that program.

In the meantime, Primeline, with the assistance of CNOOC, has been working on the feasibility study of a stand-alone development of its existing Lishui 36-1 gas discovery. Primeline and CNOOC are continuing their discussions with the Wenzhou Municipality Authority and the Zhejiang Provincial Government aiming to arrive at an agreement in principle for a take-or-pay gas sales contract on terms, which will justify proceeding with the preparation and submission of an Overall Development Plan. If an early stand alone development of the existing discovery is feasible, it will significantly enhance the development of any future resources discovered in the nearby area and the rest of the Block.

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