CNOOC Signs Supplemental Development Agreement

CNOOC Limited has signed a supplemental development agreement regarding the CFD 11-1/11-2 oil fields in 04/36 Block in Bohai Bay, with Kerr-McGee and Sino-American Energy Corp. The agreement marks concurrence on major issues of the oilfield development among the parties.

The CFD 11-1/11-2 oil fields are about 90 kms offshore southeast of Tanggu. The contract covers an area of 91 square kilometers. These two oil fields were discovered at the end of 1999 and in the middle of 2001, respectively. Under the agreement, the Company and its partners will draw up an overall development plan for the development of these two fields.

The CFD 11-1/11-2 oil fields will be developed in two phases. The first phase of the project, consisting of a central platform, one wellhead platform, a single point mooring system and an FPSO unit, is expected to come on-line in the second half of 2004. The second phase will include an additional wellhead platform.

Subject to final government approval, the Company will have a 51% working interest in these two oil fields. Kerr-McGee, as the operator, will have a 40.1% working interest and Sino-American Energy will have an 8.9% working interest.

"The discovery and development of the CFD11-1/11-2 oil fields is the result of the mutual cooperation between the Company and its partners. It also demonstrates the exploration and development potential in Bohai Bay." commented Mr. Zhou Shouwei, President and Executive Director of the Company, "The Bohai area is the focus of our exploration and development program and a major part of our production growth."