"Oil companies continue to be attracted by Bohai Bay prospects and they remain active there," said Mr. Zhang Guohua, the new exploration chief of the Company.
"We welcome and expect continued exploration interests offshore China under our PSC regime. We are committed to attracting international petroleum companies such as Kerr-McGee in searching for oil and gas offshore China. It is a win-win formula," commented Mr. Cao Yunshi, the General Counsel and Senior Vice President of the Company.
Under the terms of the PSC, Kerr-McGee will fund 100% of the exploration expenditures. CNOOC Limited has the right to co-invest up to a 51% participating interest in developing any commercial discoveries in the block.
"This contract supports our strategy focusing on developing core areas that add value to our business," said Dave Hager, Kerr-McGee senior vice president of oil and gas. "The new block has similar play concepts as our discoveries in Blocks 04/36 and 05/36, and offers opportunities to expand our prospect inventory. In addition, our new facility will allow for the cost-effective and efficient development of future discoveries."
With the addition of Block 09/06, Kerr-McGee will operate four blocks in Bohai Bay totaling approximately 1.7 million acres, the other three blocks are 04/36, 05/36 and 09/18. Since exploration activities began in Bohai Bay, Kerr-McGee has announced six discoveries in this area. Two fields in Block 04/36 are under development using a floating production, storage and offloading (FPSO) facility and two fixed platforms for dry wellheads. The facility will establish a hub-and-spoke type development in about 75 feet of water where production is expected to begin by year-end 2004.
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