Horizon Oil Puts Exploration Efforts at China's Block 24/05 on Hold

Australian minnow Horizon Oil has, for the time being at least, put on hold its efforts to gain a Petroleum Contract to explore Lei Dong Block 24/05, offshore China.

Horizon Oil entered into a Memorandum of Understanding (MOU) with CNOOC in October 2004, which obligated it to carry out seismic reprocessing and interpretation work in return for the option of converting the MOU to a Petroleum Contract, once CNOOC had gained approvals from relevant Chinese Government authorities for its award.

The prospect area lies in shipping lanes that access the city of Zhanjiang, which is an oil and gas port as well as a port for the Chinese Navy. There have been issues related to the Chinese Navy that have prevented a Petroleum Contract from being awarded to date.

The MOU provides for CNOOC to negotiate with Horizon Oil in the future, should exploration approvals at Lei Dong be offered to foreign companies. Horizon Oil shall consider that option, if and when it arises.