CNOOC & Partners Finalize Xihu Trough Development Agreement

CNOOC, Sinopec, Shell and Unocal have finalized an agreement to explore, develop and market natural gas, oil and condensate in the East China Sea. The agreement comprises three exploration and two development contract areas of the Xihu Trough covering approximately 22,000 square kilometers.

CNOOC Limited and Sinopec have a 30 percent interest each with Shell and Unocal each holding 20 percent interest. CNOOC will be the operator of all five contract areas.

The five contract areas represent a large acreage that has already made gas discoveries t is under-explored. The new venture partners plan to explore actively in the area. Foreign partners will assume 100% risk during the exploration stage.

The first development under the contracts will be in the Chunxiao development area which is expected to come on stream in mid 2005.

"We are pleased to see the final agreement on Xihu Trough exploration and development. It opens a new chapter for CNOOC and partners in the history of oil and gas exploration in East China Sea. We look forward to positive outcomes from the joint venture," commented Mr. Wei Liucheng, Chairman and CEO of CNOOC Limited. "We welcome new partners, Shell and Unocal. I am confident that they will add value to the project."

The proximity of the areas to the growing energy market in East China makes it an attractive investment opportunity for the project participants, whose combined strength enhances efforts to make the project a success.