Shell To Develop Two Blocks in Bohai Sea

Shell Exploration China Ltd. will invest a total of US $400 million to develop offshore blocks in China's Bohai Sea, according to a Shell official. He said Shell has decided to start joint development of Blocks 26-2/28 -1 and 13-1 with CNOOC Ltd. following the completion of a one-year geological study of the blocks this month.

Shell and CNOOC Ltd. have identified 600 million to 700 million barrels of proven oil reserves and 1 trillion cubic feet of proven natural gas reserves in the two blocks, which cover a total of 329 square kilometers. The two blocks are located in water depths of 20-30 meters.

The two companies will supply about 0.4 billion cubic meters of natural gas a year to eastern China's Shandong province when production starts at the blocks, which are located 100 kilometers north of Longkou city in Shandong province. He declined to say when production will start, however. In July, Shell has started conducting 3-D seismic surveys in another block in the Bohai Sea.

The surveys will cover 1,100 square kilometers at Block 11/26 and will be completed by the end of this year. Block 11/26 covers 3,190 square kilometers in the southern half of the Bohai Sea. The company also plans to drill two appraisal wells at the block in the last quarter of next year.

According to the contract, CNOOC has the option to participate in development and production once Shell makes an oil and gas find of commercial value in Block 11/26.