CNOOC May Become Operator of Beibu Gulf Oil Fields

SYDNEY (Dow Jones), Nov. 24, 2009

Roc Oil said Tuesday that talks with China National Offshore Oil Corp. over the development of two oil fields offshore southern China could lead to the Chinese taking over as operator.

"Roc is discussing all aspects of sharing and cooperation which would benefit the project and joint-venture partners, including Cnooc," a Roc spokesman said. "These discussions could result in Cnooc operating at some point in the future on behalf of the joint venture, but until the negotiations are concluded, Roc remains operator and retains the option to operate the completed development."

Sydney-based Roc has a 40% stake in block 22/12 in the Beibu Gulf, northwest of Hainan province. The block contains the Wei 6-12 and Wei 12-8 fields, with contingent resources estimated at 26.5 million barrels of oil equivalent.

Other shareholders in the block are Horizon Oil Ltd. with 30%, Petsec Energy Ltd. with 25% and closely held Majuko Corp. with 5%. Under the terms of the production-sharing contract, Cnooc's Hong Kong-listed unit Cnooc Ltd. has the right to back into the development with a 51% stake.

Project partners expect to make a final investment decision on the development of the oil fields before the end of June next year, with first oil targeted in the first half of 2012.

The first phase of the development, which will see oil moved by pipeline to existing facilities owned by Cnooc nearby, is forecast to cost US $300 million.

"Due to the nature of the current development concept for the Beibu Gulf oil field, there will be a need to share existing Cnooc-operated production facilities once the development is completed," the spokesman said.

"There are also potential benefits from sharing equipment, such as installation equipment and drill rigs, during the development phase."  

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