CNOOC & Sinopec Move Forward with East China Sea Development

CNOOC reports that the gas development project in East China Sea remains on schedule.

"We are confident about the project's future, the change of partners has little impact on the on-going project." said Mr. Fu Chengyu, Chairman and CEO of CNOOC Limited.

Mr. Zhou Shouwei, president of the Company commented, "Significant progresses have been made to optimize the Overall Development Program (ODP) of the project. Meanwhile, gas marketing is progressing well. We remain confident about the technical and commercial viability of the project and expect to complete the project on time. Chunxiao field, the first field to be completed in Xihu Trough, is expected to come on stream in mid-2005 as scheduled. It will begin to supply gas to the Eastern China region as planned."

CNOOC, Sinopec, Shell and Unocal had reached an agreement to explore, develop and market natural gas, oil and condensate in the East China Sea on August 19, 2003. The agreement comprises three exploration and two development contract areas of the Xihu Trough.

Under the agreement CNOOC Limited (operator) and Sinopec have a 30% interests each with Shell and Unocal each holding 20%. The agreement permits the foreign partners to make a final investment decision. Shell and Unocal have decided not to continue their next phase participation in Xihu Trough project since both sides have failed agree on the existing development plan.