CNPC Unit Starts Seismic Exploration in Chevron's China Block

BEIJING (Dow Jones Newswires), Dec. 11, 2008

China National Petroleum Corp.'s exploration unit BGP started its first seismic exploration in U.S. oil major Chevron Corp.'s Chuandongbei gas block in southwestern China, the Chinese company said Thursday.

Chevron in 2007 signed a 30-year production sharing contract with CNPC on the area, which is the largest the company has ever offered to a foreign company. The 2,000 square-kilometer field has gas reserves of 5 trillion cubic feet, equivalent to 142 billion cubic meters.

BGP contracted part of the exploration work on the block from Chevron and has completed drilling 5,300 wells in a 319 square-kilometer area to collect seismic information, CNPC said in a statement posted on its Web site.

The statement didn't mention when the seismic work will end and when Chevron will start gas production.

Under the production-sharing contract, Chevron, as the field's operator, is expected to produce 2 billion cubic meters of gas a year from the field by 2010, which will increase to 6 billion cubic meters a year by 2013.

However, the timing for the start of production would be an "aggressive date" for Chevron, and Chevron wouldn't sacrifice safety to meet the deadline, Stephen Green, chief executive of Chevron's South Asia unit, had said before the signing ceremony for the contract in December last year.

Petrochina Co. is the listed unit of CNPC, responsible for most of the group's oil and gas production in the country.  

Copyright (c) 2008 Dow Jones & Company, Inc.